Wall Street’s financial leaders have been paraded before Congress to explain their efforts to restore stability to our financial system. Obama has turned on the populist spigot to demonize Wall Street to justify bigger taxes and fees and hip shot regulation.
Wall Street deserves the scrutiny and reform is needed. Yet this fiasco was as much a government failure. Fannie Mae was exempt from regulation by the SEC, FDIC and the Fed. When Congress was solidly warned about excessive risks taken by the Fannies,they rejected calls to increase oversight, largely along party lines. Little protest is heard from the halls of Congress over some of the huge bonuses paid to Frank Raines and others at Fannie Mae while the system was imploding.
Some recent regulations such as the mark to market rules made this crisis much worse than it would have otherwise been. Other regulations such as control of derivatives by the Commodities Futures Trading Commissions were removed (under Clinton) at a pivotal time. The Fed ‘s monetary policy was also a factor.
A hearing to truly understand what happens and what needs to be done would have our Congressmen on the other side of the microphone.