Caligula's Horse - Thursday 17 th April 2008
BullionVault (press release), UK
Hank Paulson wants the Fed – the US Fed! – to regulate Wall Street and the finance business...
US TREASURY SECRETARY Hank Paulson just proposed giving the Federal Reserve broad powers to regulate the financial industry, writes Fred Sheehan for Whiskey and Gunpowder.
He could not have nominated a more incompetent body. The Coast Guard would do a better job.
Today's financial upheaval owes homage to the derivatives that shrouded massive growth in debt and leverage. This murky world inflated the incentives of those who ran the machinery over the cliff – the bankers, mortgage brokers, law firms, appraisers, rating agencies and politicians.
This is well known, despite their protestations. The parties knew they were behaving either recklessly or criminally when the bubble inflated. The Federal Reserve encouraged them.
Yet with a straight face, Hank Paulson proposes that the Fed now quash future imbroglios. The terracotta soldiers of Xian would bring more initiative to the assignment, as history shows.
In September 1998, the Federal Reserve didn't have the slightest idea of how the banking system functioned; it hadn't the slightest idea of the banks' exposure to hedge funds; nor had it the slightest idea of the leverage within the financial system....
....In the first three weeks of Sept. '98, Long-Term Capital Management (LTCM) – a hedge fund based in Greenwich, Connecticut – lost half a billion dollars per week and everyone knew it. Everyone except, possibly, Alan Greenspan, then Fed chairman. In mid-Sept. that year, the Federal Reserve chairman told the House Banking Committee that "Hedge funds [are] strongly regulated by those who lend the money."
Then on Sept. 21st, LTCM lost $550 million...
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Please send your comments, news tips and press releases to GreenwichRoundup@gmail.com
BullionVault (press release), UK
Hank Paulson wants the Fed – the US Fed! – to regulate Wall Street and the finance business...
US TREASURY SECRETARY Hank Paulson just proposed giving the Federal Reserve broad powers to regulate the financial industry, writes Fred Sheehan for Whiskey and Gunpowder.
He could not have nominated a more incompetent body. The Coast Guard would do a better job.
Today's financial upheaval owes homage to the derivatives that shrouded massive growth in debt and leverage. This murky world inflated the incentives of those who ran the machinery over the cliff – the bankers, mortgage brokers, law firms, appraisers, rating agencies and politicians.
This is well known, despite their protestations. The parties knew they were behaving either recklessly or criminally when the bubble inflated. The Federal Reserve encouraged them.
Yet with a straight face, Hank Paulson proposes that the Fed now quash future imbroglios. The terracotta soldiers of Xian would bring more initiative to the assignment, as history shows.
In September 1998, the Federal Reserve didn't have the slightest idea of how the banking system functioned; it hadn't the slightest idea of the banks' exposure to hedge funds; nor had it the slightest idea of the leverage within the financial system....
....In the first three weeks of Sept. '98, Long-Term Capital Management (LTCM) – a hedge fund based in Greenwich, Connecticut – lost half a billion dollars per week and everyone knew it. Everyone except, possibly, Alan Greenspan, then Fed chairman. In mid-Sept. that year, the Federal Reserve chairman told the House Banking Committee that "Hedge funds [are] strongly regulated by those who lend the money."
Then on Sept. 21st, LTCM lost $550 million...
================================================
Please send your comments, news tips and press releases to GreenwichRoundup@gmail.com
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