What? He’s filling an appointment and has promised not to run for reelection – figures. Who is this man?
Senator Ted Kaufman of Delaware! He is a man of method. The Method: There is a problem. Fix the problem so it doesn’t happen again.
There is a problem: our financial industry is a mess. Some evidence/reasons it’s a mess:
- The financial industry crashed because it was inundated with subprime mortgages that homeowners couldn’t pay, bundled by young math geniuses using algorithms their older, more traditional managers didn’t fully understand. This was the main cause of the Great Recession.
- Derivative trading allowed FDIC (government) guaranteed banks to leverage this insurance for internal profit-making in unregulated derivative markets. It didn’t turn out well, see TARP and AIG’s epic collapse. EPIC COLLAPSE! Well for the bank management, it turned out pretty fucking lucrative.
- But these big banks couldn’t fail, and most of them were likely to do so, because the entire nation’s money was in them. Why can’t we let them fail as the system is currently constructed? Because we let Lehman fail, and it almost brought down the economy. Imagine letting more than one fail.
- The financial industry is an oligarchy that controls most elements of both national parties. (And here).This grew into the “What is Good For Wall St is Good for America” meme and Robert Gibbs’ winner “We’re [bankers and American commonfolk] all in this together” (we are not, actually).
- The SEC has not regulated effectively for decades, but especially now.
- No one can explain how the the market, with its high-frequency trading, couldn’t track its buyers and sellers to show the source of a 1,000 pt one-day drop two weeks ago.
So what does Kaufman propose?
- Break up the big banks so if they fail, the government can let them. His amendment to the financial regulation reform bill would have restricted the amount the government insured and separated bank holding companies from nonbank financial institutions (i.e. derivatives trading). But, the banks got to this one, and it was voted down two weeks ago, 31 – 66.
- Now Sens. Kaufman, Levin, and Merkley – all Dems, the Republicans have come out against reforming this cause of the Great Recession – are trying to get banks out of hedge funds and proprietary trading. This would make your investments more stable, as they won’t gamble in poorly regulated markets with your money. Watch out, lobbyists are trying to water this amendment down by letting regulators set the rules. And the SEC has failed miserably at doing anything of the sort (see Reason 5) and shouldn’t be trusted to do.
Call your congressmen and make sure the Levin-Merkley Amendment passes! I would, but I don’t live in a democracy (DC).
It’s very likely Kaufman’s coming to conclusions on financial reform is because he was appointed so didn’t need the financial oligarchs’ campaign donations, and isn’t running for reelection. Tells you something about where we need to take political reform…