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    we are the ghost of all internet traditions future..., 2009-05-06 10:43:27 | Main | negative nominal interest rates..., 2009-05-07 09:41:42

    maybe we could do a brain transplant on geithner:

    Everything Sheila Bair says seems to run counter to the marching orders she executes:

    To truly address the risks posed by systemically important institutions, it will be necessary to utilize mechanisms that once again impose market discipline on these institutions and their activities. For this reason, improvements in the supervision of systemically important entities must be coupled with disincentives for growth and complexity, as well as a credible and efficient structure that permits the resolution of these entities if they fail while protecting taxpayers from exposure.

    This, being perfectly sensible nevermind nigh-infinitely right, is exactly the opposite of what she's agreed to do under the PPIP.

    At first I was having a lot of cognitive dissonance over the idea that the one economically competent individual among Obama's economic advisers was appointed by George W. Bush (and we exclude Volcker and Bernstein as they are two competent economists who were blasted off into the non-advisory kuiper belt of the administration months before anybody was sworn in), but I have come upon a cock-eyed tinhat hypothesis that resolves my inner psychic turmoil:

    Almost all of the too-big-to-fail financial institutions had, by various means, managed to put themselves under the regulatory jurisdiction of non-FDIC financial regulators, the OTS being the crowd favorite. The Bush administration, continuing the proud work of his predecessors, appointed industry insider lackeys to head these regulatory agencies, slashed their budgets, discombobulated the enforcement framework, and eviscerated their staffs. The only institution left barely-competent at the end was the FDIC, and for a simple reason: the FDIC wasn't regulating the TBTF firms, but their SETF competition. Because there's nothing like a competent regulator to keep the competition in their place, there was industry support for keeping the FDIC strong enough to keep small banks in their place, without making it so strong that it could threaten the financial oligarchy.


:: posted by buermann @ 2009-05-06 14:25:52 CST | link





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