8 reasons no Wall Street reforms in '08

[flashl]

But 'shadow banking system' is out of control, blowing new bubble

By Paul B. Farrell, MarketWatch

ARROYO GRANDE, Calif. (MarketWatch) -- Reform American banking? I'll bet you fell for Treasury Secretary Henry Paulson's clever PR move at the U.S. Chamber of Commerce last week. And now his "blueprint" for a "sweeping overhaul."

...

Yes, lots of rhetoric, window dressing to make it look politically correct. Hearings yes. But no new legislation. Wall Street dodges the re-regulation bullet, goes on its merry way, gambling with your money at the "shadow banking" casino.

1. Paulson's a wolf in sheep's clothing
Remember, just two years ago Paulson was CEO of Goldman Sachs, one of the world's biggest derivatives traders.
2. Future power grabs by Fed will need no new laws today
The Fed can handle future meltdowns by resurrecting the same "temporary" powers grabbed this time (Bear Stearns) to handle future "unusual turmoil." Except next time it will be too big, too late and too catastrophic.
3. President's already signaled opposition to major reforms
No reforms, not on his watch.
4. Washington's 35,000 lobbyists will kill any substantial reforms
The public wants re-regulation. But not the high-rollers bankrolling 35,000 lobbyists who tell Washington's 537 elected officials how to regulate and spend the federal budget. Taxpayers need to stop kidding ourselves that we're a democracy.
5. Recent history says Congress will resist major reforms
Back during the 2002-2004 mutual-fund scandals I wrote 68 columns about the shenanigans and the reform movement in Congress and behind the scenes.
6. Washington's setting up a 'moral hazard' meltdown
The point: Bailing out Wall Street is a classic example of "moral hazard," of relieving people of the consequences of bad judgment. By coddling Wall Street today, with hundreds of billions of taxpayer money, and sticking the taxpayer with Wall Street's junk, the Fed is telling Wall Street institutions that taxpayers will bankroll all their stupid gambling blunders in the future.
7. Wall Street back to business as usual in 'shadow banking'
Taxpayers are being played as suckers in this game, bankrolling Wall Street at the $516 trillion "shadow banking" casino -- built on unregulated derivatives -- getting nothing in return. Wall Street denizens can go back to gambling with abandon knowing that Washington relieved them of the consequences of their greedy gambling.
8. Systemic 'shadow banking' meltdown, circa 2012
OK, maybe not exactly 2012 -- maybe earlier, during the first years of the next presidency. Maybe not till 2013. But it is coming.

For now, however, Main Street has not suffered enough pain to revolt. And Wall Street players' greed and arrogance are out of control as they continue shifting their business model into the unregulated "shadow banking system."

MarketWatch

[Demeter]

1. Paulson Offers Us Cheetos

when we want meat, potatoes, salad and dessert.

[flashl]

2. Somedays, it seems more like the promise of Cheetos. nt

[Demeter]

3. And Others , It's Just Cheat-ers

[Hydra]

4. The truth of the matter is that this was a planned collapse

The Fed already has considerable control of what goes on- they just don't like to advertise that fact...sorta like how our Gov't tortures.

If any reforms occur, it's because the Fed wants expanded power to use their made up money directly, rather than indirectly.