Wall Street Lining Up Against Rationality

[marmar]

from the Working Life blog:



Wall Street Lining Up Against Rationality
by Jonathan Tasini

Tuesday 29 of September, 2009


There have been a number of instances in the past few months that show that the financial industry has not learned its lesson and needs to be saved from its own short-sited behavior. Banks have pushed back against new rules on credit cards and mortgages. There is a coordinated effort to scuttle or badly weaken the proposed Consumer Financial Protection Agency. And now this (courtesy of The Wall Street Journal):

Big Wall Street firms from Vanguard Group Inc. to Goldman Sachs Group Inc. are lining up against new rules to restrict short-selling under consideration by the Securities and Exchange Commission.

In several letters filed last week with the SEC over the proposed restrictions, the firms raised objections to a number of proposed limits on short-selling, in which investors borrow a stock to sell it, often hoping to profit from a decline.

"We've always felt that short-sellers enhance liquidity and provide a positive impact on the marketplace," said Gus Sauter, chief investment officer at Vanguard. Curbs on their activity, he said, could crimp trading and hurt individual investors.

A number of investors wrote letters to the SEC earlier this year when the rules were first proposed. The latest round came after a request for comments on a proposal for reinstatement of a short-selling restriction known as the "uptick" rule, in which investors can only short a stock after it rose or ticked higher.

The problem I have has less to do with the Wall Street people--their philosophy and culture of greed is so ingrained that they will not change of their own free will. It's really a question of whether the people who we elect to defend and protect the public interest have enough spine and moral compass to hold the line. And the signs are not encouraging.


http://www.workinglife.org/blogs/view_post.php?content_id=14504

[Dawson Leery]

1. What is needed is another Ferdinand Pecora.

http://en.wikipedia.org/wiki/Pecora_Commission

[whoneedstickets]

2. Any securities transaction that looks more like gambling than investing..

..should be limited or eliminated.

[Confusious]

3. I'm afraid, to me,

That's all of wall street.

I could go for that.