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Let’s Give Regulations Force and Power

81 | By Shah Gilani

I’ve been jawboning a fair amount about regulation lately, and a lot of you are getting in on the conversation. I always, always read every comment that’s posted here and I thank all of you for participating.

As a quick sidebar, let me say, you all are not a small group. Close to 200,000 people get Wall Street Insights & Indictments in their mailboxes every Thursday and Sunday morning, and that’s just the ones we send it to. WSII is picked up elsewhere and forwarded many times over. So, when you comment, your participation is noted far and wide.

You are becoming stars in the great galaxy known as “freedom of speech,” and I thank you for all your efforts. You make our conversations two-sided and always more robust.

So, in light of many comments that relate to me wanting more regulation, this morning I want to make myself clear, as in clearer. I am not for more regulation. I am for more-better regulations – as in “mobetter.”

Why mobetter? Because the only real way to give regulations real force and power is to make them:

  • simpler (so the long and windy road of legal-speak can’t be manipulated or loopholed to death),
  • more concise (so people actually understand what they’re reading and don’t have to hire teams of lawyers to read it to them, or hire them to find loophole side streets to meander down),
  • and with cut-and-dried penalties.

If we can reconvene regulations down to be mobetter, we won’t always be singing the mobetter blues when bank crooks get away with their schemes by settling instead of being driven out of business and to jail.

Cases in point (make that just a few of the cases we know about)…

MF Global: Lying, cheating, stealing, and gross mismanagement. Client losses: well over a billion dollars and counting. No nothing: no case, no charges, no fines, no jail time, NO JUSTICE.

JPMorgan Chase: Lying to and hiding “whale” trading losses from over 100 regulators who are in their offices and watching over them. No fines, no repercussions, a couple of folks retiring early, maybe a job loss or two. We can only hope this ain’t over in terms of mobetter scrutiny of all the deceit and potential fraud attendant here. Standing by.

Barclays: Libor manipulation. $455 million paid, one job lost, no jail time.

ING Bank: Essentially aiding and abetting money transfers through New York money center facilities on behalf of “Enemies of the State” (that would be our state), also known as “sponsors of terror” and “rogue regimes.” Fine of $619 million (a record fine, whoopdee do!). No jobs lost, no jail time, and probably a few weapons of mass destruction bought and paid for by check or wire out of accounts shepherded by ING.

Wells Fargo: Discriminated against African-American and Hispanic borrowers by charging the least able to pay the most for mortgages. $175 million settlement. No guilty plea necessary (neither admit nor deny… ever), no jobs lost, no jail time.

Capitol One: Deceptive marketing; getting desperate credit card borrowers to pay for add-ons they didn’t need or want by lying to them when they called to activate new cards. Damages and fines: $210 million. Chalk up one, their first ever, for the Consumer Financial Protection Bureau; the best thing to come out of Dodd-dumb-Frank. Still, no jobs lost, nor jail time.

Of course, we could go on and on, like adding HSBC money laundering, PFG Financial fraud and theft, Countrywide discrimination (that’s where Wells said they learned their tricks), Morgan Stanley, Goldman Sachs… all of them pretty much have been found to be liars, cheats, essentially crooks and what we might otherwise call criminals.

But they’re not, you see, because they’re never guilty, because we don’t have mobetter regulations.

That’s my indictment for today.

I have some insights, and you aren’t going to like them, but you REALLY need to hear them. You’re going to want to protect yourselves from what’s about to get really bad.

I just don’t want to ruin your Sunday, so you’ll have to wait. And, besides, the British Open is on.

Shah

81 Responses to Let’s Give Regulations Force and Power

  1. Richard Schulz says:

    Greenspan was noted for favoring banks with the now infamous Greenspan put. Greenspan was the protege of Bernacke, who has carried on to protect banks and damage the middle-class savers and investors. Debt cannot be solved with more debt, and Bernacke’s push toward riskier investments. The Federal Reserve is essentially a bank, founded in 1913. Since then the value of a US Dollar has gone from $1.00 to under $0.05. The FED has increasing taken on more debt, under the guise of “stimulation”. This will end disasterously, when the global debt market implodes.

  2. MAGOO says:

    YOU ARE SO RIGHT. WHAT i FEEL IS THAT THE REGULATORS
    NEED REGULATION RATHER THAN SIT ON THEIR DUFF, SAY
    NO YOU SHOULDN’T DO THAT, NOT EVEN SLAP THEIR WRISTS,
    BUT LET THEM CARRY ON AND ON. THEY CARE LESS IF THOSE
    AROUND THEM THAT THEY ARE KEEPING MONEY FOR OR FOLLOWING THEIR ADVISE ARE LOOSING THEIR MONEY, THEIR
    RETIREMENT THEIR NEED TO BE CARED FOR BY THEIR SAVINGS
    AS LONG AS THEY MAKE THE BUNDLE. THEY SHOULD BE FIRED,
    LOSE THEIR PENSIONS SO THE EXAMPLE WILL WARN OTHERS
    THAT SCREWING AROUND WITH OTHERS PEOPLE”S MONEY WILL
    HURT SO MANY WHILE THEY CAN REAP A HARVEST.

    wE NEED BETTER CONTROLS, MORE PENALTIES AND MORE
    PUBLICITY AS TO WHAT THEY DO , THE HARM THEY CREATE,
    AND THE PENALTIES THAT THEY FACE BY DOING WHAT THEY DO,.

  3. dave says:

    IMHO there are only three types of regulations. The first is regs written by kiddies, that is people who have spent their entire lives either in government or academia with possibly a few very short visits to the real world outside of those two places. When these regs are enforced by other kiddies you have cases like the couple who were fined because their rabbit cages were a quarter inch too small in one dimension.
    There are also regs written by people who want to get good jobs in the industry that they are supposed to be regulating. By the process of regulatory capture they set themselves up to protect their industry from the public, and from companies that want to get into the particular line of business involved. Often their regs read like they were written by the lobbyists for the industry involved, and we have to suspect that they are.
    The third type is a very small minority. They actually intend to protect the public from excesses of the industry involved. In general they soon change into type 2 by regulatory capture, that is learning about the industry from the people in the industry who all have their own viewpoints to get across to the supposedly neutral regulators. Some authors have stated that it takes an average of 20 years to change from type 3 to type 2.

  4. CJ Mendes says:

    The word regulation elicits two very different responses from market participants. The average retail investor more often than not is welcoming of it because of the false expectations that more regulation equals more transparent markets. There is a larger and more influencial group which has a much different take on more regulation. The sell side abhors the mention of more regulation because it means the cost of “doing business” (read “ways to get around the new regulation”) goes up.

    It is important to note that more regulations even if they are “better”, do not mean a different outcome to the problems plaguing this market without proper enforcements mechanisms.You can regulate the industry to death but unless there is an investment in the enfrastructure of the enforcement agencies (SEC, CFTC etc) to be able to properly do its job, more regulations means a lot more political talk, lots more work for fewer enforcement agents which all result in little actual improvement.

    To put this in the perspective of the recent tragedy in Colorado, the regulators are taking bean shooters to a fight against an opponent with AK47s. In this regard, I disagree that we need more regulations per ser although bringing back Glass Steagall would be a huge step forward. What we need is responsible enforcement of regulations already on the books.

  5. Bob McIntyre says:

    Great article. How is this for “justice.” When the state/feds bring charges against someone it would be like poker. Everyone puts in their 2 cents worth – thus 5 years plus or minus. The loser goes to jail.

    Now this would add to the largest prison population per citizen in the world. Thus, they could release the lower crimes to community service or work for the state on probation. I could go on but I respect your time.

    Thanks again for the articles.

  6. martin says:

    Mobetter is fine, but must incorporate personal responsibility for crimes and theft by the bosses. Fining companies, however much, only affects the bottom line and employees and shareholders. Prison and confiscation of personal assets for the responsible bosses would be appropriate. Abnd not in prisons for the nomenklatura like Lompoc. Hard time.

  7. Ricky says:

    I agree that Mobetter laws and regulations need to be written, but first the existing laws and regulations need to be eliminated. Then the new laws and regulations need to be written by someone who is not a lawyer or politician. Laws and or regulations written by lawyers or politicans are written so they have many different interpertations and benefit the lawyers who are paid to interpret them.

  8. Thomas Kroger says:

    Reflections, 7/21/2012

    I just viewed a video presentation, from one Lombardi Group, that struck me as reliable and authoritative. Essentially, it says that the turbulence we’ve experienced since 2007/8 will persist into the short-term, and intermediate-term future, and that there are no easy or painless solutions at hand. My guts tell me much the same.

    In the face of these realities, remaining focused, centered, and rationally optimistic about one’s prospects becomes critical.

    As I see it, we are about to be split into two warring factions here in the U.S. – almost like H.G. Well’s depiction of the future of humanity in The Time Machine – between the Morlocks and the Eloi. Therein, in that far-distant year of 802,701 A.D., the Morlocks performed the useful work in society. The Eloi were lovely, but resembled children, in their dependency upon the Morlocks. Some writers and commentators likened the Morlocks to the Proletariat. They likewise likened the Eloi to the Bourgeois.

    But the Morlocks ate the Eloi, practicing a type of cannibalism. This isn’t as far-fetched as it might appear. Our “Morlocks” consist of those in the financial industry – the major players who profited from the bailouts, and handouts, provided courtesy of the taxpayers – the middle class – hence the Bourgeois. That is our new form of cannibalism.

    Yes, we’ve come a long way from Industrial Capitalism. Herman Kahn, as I remember, was among the first to depict our current system as one of “Financial Capitalism,” and this sad state of affairs appears to depict its inner workings. The true architects of the present order were those same individuals who appeared at Jekyll Island in 1913, to orchestrate the passage of the Federal Reserve Act, by re-bottling the failed Aldrich Bill. They did exactly that, and accomplished what they had in mind – to make the general public the underwriters of the debt they planned to have the Federal Government issue to them – or more precisely, to the banks they owned – as the liability underpinning the new currency system they had thereby established. It was, and is, a gigantic Ponzi scheme, easily the largest ever devised.

    As I see it, this system is approaching its outer limits, and hence represents nothing so much as a credit-card – a liability – which has now been spent to its limit. We have lived for decades with the presumption that there simply was no limit to the debt that could be sustained by our society – because in true Keynesian style – we were assured “we owe it to ourselves.” Even if that were true, it wouldn’t matter, because there is a point at which ALL who own capital – those who LEND – become reluctant to purchase additional debt. Instead, they want capital, not promises. So if they do lend at all, it comes at a higher price – e.g. higher interest rates. When that happens, and it will, it will send shock waves thru the entire global economy. Stay tuned.

    But the upshot is this – in a system such as ours, a development such as the Federal Reserve system can be more readily understood as THE necessary condition for the politicization of money. That is exactly what has happened, and one can’t possibly interpret the growth of the welfare state, both here and in Western Europe, as occurring independently of a central banking apparatus. To put it bluntly, a central bank is merely a mechanism by which one creates money – or more precisely CURRENCY – out of debt. It will work – for a while, because any Ponzi scheme will work for a while. And the politicians love the system, as soon as they discover that it provides an alternative to direct taxation. But being the chain-letter that it is, a central bank is an inherently explosive and untenable mixture, especially in a “democracy,” in which the people grow fond of voting themselves benefits from the public treasury. The “people” – when this occurs – aren’t to be blamed. They are merely following the lead of their elected leaders, notably those members of Congress, who create plush pension plans for themselves, and avail themselves of the finest medical care, all at taxpayer expense. Whose lead are these elected officials following?

    I’d say they are acting like good Morlocks, feeding off the Eloi.

    Industrial capitalism, for all its abuses, never looked so good. At least therein, goods were produced, and a semblance of public morality was observed.

    Thomas G. Kroger

  9. Todd Householder says:

    The downplaying of the LIBOR scandal is humorous! Even folks on national media are saying “no harm no foul”. Someone paid for that manipulation and I am sure it cost billions of dollars to those that did, as why would the manipulation happen in the first place if it wasn’t to benefit someone??? Have to believe that those damaged with accounts linked to LIBOR index will be coming forward soon!!

  10. PB says:

    A well written rant. I love hearing your Insights & Indictments!
    I would like to see justice also, but if I may though disagree with the ‘NO JUSTICE’ comment.
    I’ve been in business almost 20 years and have over 100 employees, I know that not all of them ‘like’ me, but all of them respect me, because I’m fair and just. Very few respect these companies or these people. Respect and a clear conscience is worth much more.
    I don’t envy them either (like the 99%) that is a transgression as well as their greed & crimes. Justice may not come in a form that we can see, but make no doubt it does come.

  11. ray says:

    Glad to see the clarification.

    The reason Banksters pay a fine without admitting guilt: The N.Y. Federal judges are in the pocket of the gov’t (who is in the pocket of the Banksters) that relishes the revenue from the fines while not caring about the peasant citizens defrauded. There is only one N.Y. Fed judge that I know of that is not accepting the ‘negotiated settlement’ for the fine without admitting guilt scheme.

    While 95% negative on the future of our country, I still have a glimmer of real Hope and Change; probably in 2016 we will see a Libertarian get elected. I say this because the data already points to entry into a Global Recession. By 2016, even the sheeple will realize they have been conned and dismiss the Dem’s and Rep’s, Big Gov’t, and the Unions.

  12. reiko yokota says:

    Dittos for today’s ‘insights’. We ‘slave-citizens’ of what used to be called the land of liberty with justice for all, etc. must wake up to how the USA is becoming the ‘evil empire’ which in recent history was globally vilified. “We have to return to the ‘founding’ premise of ‘we the people’; not ‘we the government’.
    Add’l dittos for your closing remark to enjoy today’s British Open!

  13. Skip Canevit says:

    While I am not entirely against regulations, I am against the process by which they are administered. Therefore, in the spirit of Mobetter I would recommend the following guidelines also be employed on the regulators and the administration of the regulations.

    1. Your three steps are applied to all regulations existing as well as future regulations. (an entire overhaul of the system)
    2. Individual Regulators are not allowed to have any influence or dealings with companies they previously worked with or for in any capacity for a minimum period of one year and never would even be better.
    3. Regulators when returning to the private sector, cannot take a job in the area they regulated for 1 year after leaving the regulatory agency.
    4. Regulators cannot have any formal affiliation (board member, consultant, etc) in the industry in which they regulate.
    5. Regulator’s will not have limits in the administration of regulations. However, there shall be a limit to the ability of the regulating organization to create new regulations (once the initial overhaul has been completed) [This should prevent the agency from going non linear as the EPA has in many instances-creating regulations upon regulations that restrict the free market.].

    My only fear with greater regulations is the fact that regulating agencies tend to take more rather than they give to a free market system. As such, there needs to be specific limits and mission of the agency. Anything outside of the scope of the Agency will need to require approval and they must not be allowed to perpetuate their existence by increasing the scope of their Agency.

  14. Veronica says:

    I am, so happy you are spelling all this out – most of the public is totally unaware of what is really going on – if we can somehow get the facts out to the masses we could really reinvent our financial structure for the better – they will only do what’s right when they are really under threat !
    SLICK is despicable !!

  15. Larry says:

    Your wishes are admirable but totally contrary to the wishes of the trial lawyers. Since they write probably 90% of all rules and regulations I don’t see how this situation can be overcomed

  16. Rick Adam says:

    Perhaps the time has come to prosecute a few lawyers for aiding and abetting in the crimes committed by skewing the interpretation laws and regulations with their word games and definitions of words chosen to confound the spirit and intent of those very laws and regulations intended to ensure moral and just conduct by their clients.

  17. Phil Kantor says:

    Your recommendations are certainly essential. I agree, but how can such actions be accomplished?

  18. JOHN maslin says:

    I have been trained as a law drafter and am a top lawyer and would be grateful to be included in the Team that drafts the legislation necessary.
    I live in Samoa and am an New Zealand and Samoa citizen.

  19. Chris Santos says:

    Hey Shah,
    I love ya! You’re humorous, to the point, unafraid of backlash, truthful, intelligent, humble, and good looking to boot!
    We need folks like you in government (where’s Ron Paul indeed!) and I truly value your opinions, especially these days when most in your position talk out of two sides of their mouth….
    If I committed any of the crimes you just cited in your post, I’d be rotting in jail. Where has Justice gone?
    Chris Santos

    • Geoff says:

      Just as we have lost contact with “common sense” over the last few decades so the word “justice” has slowly morphed into the word “legal” and since the English language is so malleable lawyers have bred like white fly in a tomato patch.
      For some reason, not withstanding the intellectual abilities of the combatants and referees in a courthouse no-one ever goes in knowing exactly what the outcome to their case will be. This surely suggests that the “legal system” could never be described as excellent but could, perhaps, better be described as “untidy”.

  20. Aaron Rosloff says:

    Shah,
    I enjoy every minute reading you indits
    Please get yourself appointed head of the Justice Department. You have my vote and lots of others.
    Aaron

  21. harley weiss says:

    I would like to add one thing for discussion. I think that every law should include a statement of intent along side and part of said law.. The way things are now, it makes a game of finding ways around the wording. Smiley faced suits desiring power and money have always found ways around the wording of laws. Maybe the intent would be more of a restraint toward abuse and manipulation.

  22. Joe says:

    Couldn’t agree more. As this makes too much sense, it’s likely not to be acted upon by those who are aiding and abetting the financial crooks, the politicians. Their latest show of cowardice in dealing with – or rather not dealing with – the gun laws is another case in point.

  23. John Syts says:

    I agree with the mobetter ideas, and add to that “enforcement”, not saying such things as: “Corzine is the most respected financial person
    by the top of the current US Administration”, and leaving the case as such…… How about “Too big to fail”? If they are too big to fail, don’t agive them any tax payer bail-out money, as they will never fail.

  24. Tom Evans says:

    ” Of course, we could go on and on, like adding HSBC money laundering, PFG Financial fraud and theft, Countrywide discrimination (that’s where Wells said they learned their tricks), Morgan Stanley, Goldman Sachs… all of them pretty much have been found to be liars, cheats, essentially crooks and what we might otherwise call criminals. ”

    Shah, this is really the ‘bottom line’ in all of this in my opinion. It is not ‘mobetter’ regulations we need, but ‘mobetter’ ENFORCEMENT!

    All the conditions of outright criminal activity and wrong-doing could be dealt with correctly IF we had some semblance of the law-keepers we had in Bill Black’s day. When he headed the investigations into Countrywide, etc. there were over 1000 arrests and hundreds went to prison.. Contrast that with everything that’s occurred in the world of GLOBAL finance since 2008 and it’s one of those real easy-to-spot..’What’s wrong with this picture?’ scenarios… NOBODY even indicted! WTF!!
    In conclusion, I must disagree with your premise of ‘mobetter’ regulations and offer this: we need ‘mobetter’ oath keepers. This also applies to the military where we take the oath to defend against ALL enemies foreign AND domestic. We need major changes here.
    I believe ‘oath keeping’ has been undermined by the big money and will need to fall apart to show everyone how screwed it is!
    Thank you for a chance to speak on these things.
    Tom Evans

    p.s. Bilderberger group met here in the USA this year. First time since the last presidential election. Romney attended. Guess who’ll be pres??

  25. don says:

    Think of banks as public utilities who provide financial services, Electicity,gas,water,sewer,telephone,television,radio etc are all regulated,I see no reason for banks not to be controled by the some level of government.

  26. Robert K. Doyle says:

    Who to believe???What to believe???? Where are our leaders??? So far I believe it is all FUBAR!!!

  27. Katman says:

    The problem is THE STATE BAR UNION MEMBERS in their private courts protect the banking cartel.

    D & B provides proof the courts are “For Profit Businesses”.

  28. Gordon Foreman says:

    Shah,
    I agree that we NEED mobetter regulations, but as long as Congress is addicted to the money they raise from banks I just don’t see how we are going to GET mobetter regulations, not to mention real enforcement of said regulations.

    When compounded with the problem that a felony conviction of a bank makes it ineligible (as I understand it) for cash at the Fed discount window, and the government depends on these too-big-to-fail banks to help service the Fed and the government, then there will continue to be no real enforcement against them,

    I don’t think that it was surprising that when Jamie Dimon came before the Senate for supposed questioning, he was treated like reigning royalty. He has what they want, and although there are some individual senators who would like to do what’s right, I see no possibility that a majority of the senators and congressman will get on board.

    I wish you luck, and I hope you make some real progress, but I’m not holding my breath. The situation we have did not happen by accident, but because many powerful people found it to be in their best interest.

  29. Magic Potion says:

    Shah… Not only is your cause a worthy one, your insight invaluable and your judgment highly accurate and sane, but you also have the rare courage and fortitude to back it up; and all this in addition to being (regardless of the subject) an accomplished and remarkable writer as well. A book of the accumulation of your articles, if only in diary form, would no doubt be a bestseller, one that would make for compelling and interesting reading during these shifty and shaky financial times. How about, ‘You Can Bank On It!” – Ha! Keep up the great work!!!

  30. Pappy says:

    I love the idea of “mobetter”, including mobetter penalties when these too-big-to-fail banks get out of line. Top management would be much more careful about staying on the straight and narrow if their assets were seized similarly to what happens to drug dealers when they get caught. Same thing for regulators who know what is going on and look the other way. Same for the politicians who accept “campaign contributions?” to pave the way. Perhaps this could bring us a small step closer to straightening out our economy. Just a thought.

  31. Robert Openshaw says:

    I am wondering where the “fines” that are collected go.Is that for the buddies at the SEC?

  32. Bruce Sutton says:

    Reduce the EPA to i2 scientists and make them a think tank/investigative unit with only the ability to make recommendations to the congress. Remove all regulations so far passed by them and all enforcement power from them. Congress may renew only those EPA rules after floor debate and vote.
    Next, return all federal lands not currently occupied by a federal structure to possession and control of the states. Politicians have proven they are not intelligent enough or honest enough to have such authority.
    Next, eliminate the 17th amendment and return the appointment of the state senators to the states as happened for the first 130 years.
    Next, Remove all federal authority from the activities as education, medicine, and energy. They inhibit rather than assist.
    Next, Each state using a self realized formula from each state house as per population, taxes, income, etc., should decide on the amount they should each put toward funding the federal government. And the federal government should be mandated under penalties to live and govern within those means.

  33. caseykoehler says:

    The regulation has to be very simple to put a lid on corporate greed.
    A simple one is to allow PRIVATE company execs to make as much as they want and can. BUT, when they become PUBLIC then they are mere managers of the stockholders ownership….and their salaries and bonuses must be limited throughout all public companies..thereby yielding some of those excessive salaries and bonuses to increasing R&D, dividends, and other good deeds for the Corporation..not for the greedy execs. Fact is, most execs are not really worried about being fired…Diamond’s lady Investment geek will suffer some clawbacks….so what she’s made 16M/year for years and
    she’ll just have to struggle along on her savings and assets…that’ll be really difficult!!
    I can point out, many, as can you, execs
    that have bled their companies of excessive monies…a couple..
    Eisner when at Disney took a 37M salary then laid off 5000 wrokers
    at Disney World and took a 37M bonus..could have used some of that to promote travel to Disney given breaks on pricing to visitors..etc or even laid off only half as many as he did..this wasn’t a problem with Disney World..it was a problem with the movie side of the business!
    The former CEO at Exxon retired got a 147M dollar retirement deal..
    they could have had a gorilla locked in his office for the ten years
    he held that office and they still would have had the same or even more profits (because the gorilla wouldn’t have spent so lavishly)..
    I can go on and on… but Jamie Diamond isn’t worth 27M plus bonus per year…how about 12M per year…PERIOD…then he gets a bonus
    if the stock doesn’t drop more than 10% (three years after earned)
    and that bonus is just the price of the stock at the time the bonus is earned..(The outcry would be “Oh, but what if the market drops and the stock drops through no errors on his part…explain that to the mutual funds by which most pensions are funded…if the stockholder suffers through no fault of their own then so should the CEO. The profits belong to the stockholders and they trust their managers to
    do a good job, not strip out free cash. A couple years ago Goldman Sachs executives took, order of magnitude 12B in bonuses they could have given another two dollars/share to the stockholders…
    I may be off on the bonus $ but at the time I did the math and compared that to number of shares outstanding and it came out to about $2/share…how about Fanny and Freddie?
    That, though they are unable to articulate it, is what the Occupy thing
    is all about….it just pisses people off that these executives are ripping
    off the system…though they may not understand LIBOR, and what is
    going on in Europe, and the Fed giving free money to the same bastards that screwed the system in the first place..they know that it is wrong….when these guys get a company in trouble with bad decisions..there are Malfeasance and Misfeasance laws in the U.C.C.
    under which they could be prosecuted…just requires a few of them to get hammered with hefty fines and property seizures and some jail time and the bullshit would stop…the regs are there. Some one just
    needs to have the courage to enforce them. Boards all have some insurance to protect them from suits of this type but if they are hit a couple of times, and the fines are hefty enough, they’ll get hit in their
    pockets and will be a little more reluctant to serve, or at least serve more vigilantly.
    I suspect it is moot at the moment, as we have less than 6 months before we begin our skid to a disastrous depression then MAYBE
    men of courage will make some better decisions to protect us from the riggers of the game!

  34. giles says:

    I hang on your every word. I just wish there were millions who understood. I wish I had all your picks.

  35. Mahadevan Ramassubramanian says:

    For regulation to be effective there should be streamlining of the regulatory agencies–the overlap should be eliminated-specifically WHY should there be a federal deposit insurance corp.a financial banking oversight body,a body for regulating Savings and Loan.The Glass-Stegal act has to be reinstated–the arguments for the repeal have lost currency in view of the risks and losses outweighing the benefits which the general public never realised in the first place .

  36. James MacInnis says:

    Following the credit crises of 2008 and the bailout of the too big to fails it was Shah Galani’s colum that I turned to. Prior to that I did not know what a Credit default swap (CDS) or a Collaterlized Debt Oblogation (CDO) even were. in fact i never knew such things existed.
    They were clothed in mysterious languagenot only to give the impression that their complexity was such that they could only be understood by a few financial geniuses.The real pupose to cover up their duplicitous dealings.Since then duplicity has continued and it is obvious with the collpase of M.F. global, the resignations, the Libor scandal and money laundering scandal that the Global Financial system is moving closer to critical mass.
    It is so refreshing, however, in the midst of so much turmoil; and mis- infiormation that there are people like Shah Galani who still believe that transperency, integrity and honesy is not only the best formula for financial success, it is the only formula. Those who abandoned these principles are approaching their day of reckoning.

    Thankyou Shah!

  37. Maylene Clearwater says:

    We have laws & regs. (Otherwise it wouldn’t be illegal.) What we don’t have, as you say, are simpler and enforced. But Mr Market would handle this. If not propped up by government, these immoral banks would go under. No one would do business (very long) with people they didn’t trust and knew would not be rescued. And the losses on the front would probably no where near reach the losses we have now.

  38. J. William Seaman says:

    These finacial crooks should be subject to greater penalties, with jail for most of them and their punishment be well pubisized. The only problem is, if there is enough additional prison space for these extra rogues

  39. Alexandra Chapman says:

    Shah

    I think you have come up with a really powerful concept here. I think “mobetter” is an excellent way of describing what is required.

    I will post this as a link – perhaps you could encourage all 200k+ of your readers to do the same.

    If you can make this a meme (an accepted way, idea or belief then we stand a much better chance of achieving it. Every piece of legislation then must past the “mobetter” test.

    I think its brilliant. I would be happy to help personally to spread this idea.

  40. Tom Dorn says:

    You can only get “mobetter” if the regulators (SEC) shared the liability for their mistakes. I think they might have caught Madoff earlier if their salary was cut in half and they lost their pensions until the losses were recouped. Much better than firing a few! Similarly for all Fed employees if they were held accountable for the stupidity and mismanagement their leader provide. And what of congress would they accomplish their job if their salaries, expenses and pensions only accrued from a truly balanced budget. I think maybe yes!

  41. allan h (from aus) says:

    Thats it. Simpler laws. The trouble is we are bound and organised by lawers (millions of em), & they HAVE to prove their worth. Could we have it so simple as 1. “No one shall knowingly, unwittingly or carelessly cause loss or suffering to another by any means whatsoever.”
    2. “Every person being aware of such loss or suffering shall report such action or event & name the perpetrator thereof to the Registrar of ‘Apparent Crime’.”
    3. The Registrar of ‘Apparent Crime’ shall openly & publicly list all such reports for perusal by every citizen.
    4. Investagative reporters who register their interest in any such report with the Registrar of ‘Apparent Crime’ shall be lawfully able to have access to all records and information required by him/her to enable an independant ascessment of the ‘Apparent Crime’.
    5. Full disclosure of actions and findings by each Investigative Reporter shall included in his/her report which shall be lodged with the Registrar of ‘Apparaent Crime’ at least every 6 months untill investigation is complete.
    6. A maximun of 2 investigations shall be approved into each case reported to the Registrar, who shall approve any number of ‘reported cases’ be included in the investigation.
    7. Where investigation discloses ‘Apparent Criminal Activity’ the report shall be submitted to the Prosecutor of Apparent Crime who shall be obliged to lodge a prosecution case with the ‘Court of Citizen Oppression & Redress’.

    I am thinking that self funded investigators should submit an a/c of time & expenses with each report so that reimbursement appropiate to the circumstances can be approved and made by a suitable fund for the purpose. That fund should be credited with fines imposed & used to make restitution to aggrieved citizens.

    Think about it – democratic, open, and appropiate in a capitalist society ?

  42. Larry Sand says:

    Shah,
    You simply point out the obvious, regulations are ineffective, and regulators are government employers who work only to keep their own house “clean”, they just follow their government rules….if they do that, no matter what happens to the bank, their job is sucure. They have NO INCENTIVE to rock the boat, especially since their bosses (politicians) are in bed with the bankers.

    Note this: in 2008 the only institutions that failed were government regulated – banks and insurance companies. AND (connect the dots) the politicians bailed out their friends (Bank and Insurance company executives) with our money.

    It was Congress that passed the laws, which directed FNMA and FHLMC to purchase crappy loans (of course Standard and Poors, knowing nothing about mortgages, kept rating their securities AAA because FNMA and FHLMC were to big to fail). HOWEVER, talk to anyone in the mortgage backed securities industry and they will tell you exactly what is in each pool (security) and those folks knew that the loans were crap, so they insured the pools!! And the MBA’s at the insurance companies, seeing a AAA rating thought they’d died and gone to heaven….all this business on good quality stuff. Stupidity and Fraud abounded, because each man/woman was serving their own interests. There was/is no fiduciary attitude anywhere in those industries.

    Solution: REMOVE ALL REGULATION and regulators. Offer deposit insurance to a bank, only if their entire senior managment team AND all of their directors will be fully liable for the first losses. After they are wiped out, then, and only then will the fed spend OUR money to cover depositers. Two things are accomplished: those who run the place are at risk and the public will be a double check, because they will be carefull to check out an institution before they deposit their money. They won’t want to be part of a failing institution.

    Best solution: Deal with honorable men/women – good luck on that one!

  43. Phil says:

    Yup, we need regulations the same way we need laws. Ideally clear and simple ones, but firmly enforced and all-encompassing.

  44. Rapscallion says:

    Shah,

    Great Open Championship, by the way! Never would have predicted THAT ending, but good for Ernie!
    If we can, by any means of the imagination, get mobetter regulations before these crooks and thieves ride off in their golden parachutes with their ill-gotten gains, the world will be a better place. Not because it will help any of us little guys, but I will at least have a smile on my face while in the soup line, knowing they got theirs! Of course, they’re going to prison will only mean they will be better fed than I, so we will need some really ‘motivated’ mobetter regulations.
    Looking forward to your insights!

  45. tomt says:

    what your saying is true, and speaking out and revealing these issues is honorable, and valuable to many who may not realize that “we the people” have not been vigilant for a long long time in regards to allowing our government to settle white collar crimes with a wrist slap.
    What disturbed many 40 years ago disturbs only a few today as these “judical” outcomes are just one of the means used to undermine the public’s perception of justice, and ultimately their moral compass.

    The disease of corruption has spread throughout the system, while the public at large has been taught to believe the government is just, and its actions really benefit the public. Sadly, the numbers of believers represent the majority.
    Psychologists can point to clinical evidence that even after we crash and have been living in a “Greater Depression”, a large percentage of the population will remain in denial, and continue to support “their” elected government officials.
    I trust this research although I wish their wrong, but I see this in some folks I know – here in California you might say I am surrounded by them. There is always hope, but the odds resemble the lottery..

  46. Harold says:

    You haven’t seen nuttin yet : assets Derivatives

    JPMorgan Chase Bank ………$1,811,678………..$ 70,151,756
    Citibank National Assn………..$1,288,658………..$ 52,102,260
    Bank of America NA……………$1,451,969………..$ 50,135,890
    Plus a bunch more, i’m getting sick. hfb

  47. Dr. Jim says:

    Cute. Basically, insanity is all the worst aspects of human nature, such as the seven deadly. in mystic terms insanity is simply lack of enlightenment & is the mother of all sin, ignorance. Her consort is fear. It is insane to look to the government to regulatye itself because the Fed type private for profit banks conrol of the government because they are CHARTERED TO DO SO by our government of traitors, goonies & zombies, under threat of assassination, war, ostracism, blackmail, boundless deceit, etc. Whosoever holds the money power holds the sovereign power. This right must be taken by force & subterfuge, & is at the basis of all war.

    • Dr. Jim says:

      and by the way kids, the UN is really there to protect the world’s Fed type banks against any nation that tries to get free of them & their puppet governments. Those “philanthropical” UN programs like food programs, medical care programs & debt financing programs are totally corrupt at all points. In fact the entire world standard “health” care medical system is incredibly insane – with the exception of the medical forte, emergency treatment. But even that is corrupted by using it as bait to switch those who survive into endless drugs, surgeries & radiation, for the purpose not of health or recovery, but of maintenance of the disease.

  48. tobewan says:

    Shah: It’s important and comforting to know that eventually things will be rectified, but NOT until the current system is ready to “Call it quits” world-wide, and are in need of a Supreme regulator who created this global habitat in the beginning. Mankind will give up on their efforts but don’t give up on Him! He is our fail-safe! And thanks for your interesting informative articles.

  49. Wayne Halstead says:

    Agree with the need to penalize the guilty, but regulation has broader aspects. You do not advertise as being an economist, but we should not forget that the role of government, as reflected in its regulatory activities, should be to free up folks who want to create jobs and make a little profit. These activities make the trader’s world possible, and regulations that stifle them are bad, no matter how many bad guys get punished. Also, you might emphasize the importance of letting the market be the primary “punisher”. There is no substitute to letting the stockholders vote with their feet, without the government protecting the enterprises that could not honestly compete over the long haul. There is no substitute for a little daylight if you want markets to do what Adam Smith et. al. said they should and can do. Wayne

  50. T. says:

    Shah, hope you had a great weekend! We went to the lake with the family and friends but I could’nt help think this could this could be our last time to be free to do this. I think a lot of people feel things are going to REALLY get bad. Again, you have a way of putting it in black and white that I appreciate. Thank you Shah!! I really look forward to your insight of this bad situation we all face ahead of us!
    Best regards, T.

  51. Sergio says:

    Regulations are just “words on a page” that can be changed at will of the bankers and crooks.

    More or better regulation is totally useless unless you have a strong ENFORCING Elliot Ness behind it.

    Anything else is a waste of time and effort.

  52. Josh Owen says:

    Shah im 18 years old and fresh out of high school.and relatively new to the world of finance. So please look over all ignorance that may pass through my mouth. You call for stronger regulation, and say that regulation needs more teeth. yet we all know that no matter how strong the security/regulation their will always be loopholes. Man is inherently evil and we will always find a way around security; if that was not the case then surely after thousands of years their would be a lock that could not be broken. However if you allow a market that balances itself then wont all of this get worked out? If you have a set of scales it is plain to see which side is heavier. However if you start to aid the scale in doing its own job then the facts become distorted. Continuing with this analogy; if the person regulating a scale is also corrupt then the scales become correspondingly even less accurate. However, i am not calling for a completely unregulated market, but i do believe the answer to the problem is directly related to the regulators themselves. If the regulators do not honestly regulate then no matter how many “teeth” we give them there will never be true accountability.

    p.s. i have been working as an intern at trilennium financial, and have been reading thousands of emails on market advice throughout the summer; and have been quantifying all of the data. I do not always agree with the things you say, but i do however appreciate the knowledge you impart to your readers.

  53. None of the Above says:

    Proposals for change disregard the Aesop’s fable of “belling the cat”: i.e. who is going to do it? Regulations must be passed by Congress. The bills are written by lobbyists. Elected officials have no time to write bills because they are too busy campaigning. And, as the band leader said, “Requests written on currency of larger denominations will be honored first.” BTW I’m running for office. Vote for None Of The Above!

  54. Don Fishgrab says:

    Just simplifying the wording would greatly reduce the number of laws by eliminating all the laws trying to close loopholes in the current laws. Making laws that pertained directly to the problem would also help. A law that medical hospitals or medical suppliers could not charge a higher rate for those who don’t have insurance would greatly reduce the need for insurance, lowering the prices insurance companies could charge, while american Citizens could not be charged ten times as much for medication as Canadian or Mexican purchasers. Such a simple bill would have a greater benefit than the entire Obamacare program, and is only one example.

  55. A. Harrington says:

    You are one of the very few that I think are willing and very able to confront the core issues head-on. So, I totally appreciate and agree with the bulk of your writings. With regard to regulation, however, I think much more than that is needed. Most regulations are written by lawyers with a huge amount of input from those to be regulated. That is why they so often lack the real teeth necessary to make any truly substantive difference.

    First of all, I think if you look at most any of the real problems we have in this country, the root cause can be traced to lawyers working on behalf of clients who are trying in one way or another to either directly create legislation or contracts that pump money out of the government money pit OR to use the law to skew the competitive playing field of their particular special interest in such a way that the client is insulated from truly having to compete for business as would normally be the case in a truly capitalistic situation. Thus, it is in this way that legislation and regulations mount endlessly in our march away from a Constitutional republic and capitalistic economy towards the Socialistic oligarchy we now have.

    instead of more regulations, what we need in my opinion are two new Constitutional amendments. The first would make it a felony to create any legislation that was designed to provide a competitive advantage through manipulation of the law for any private enterprise that is engaged in business for the purposes of making a profit.

    The second new amendment I would suggest would be designed to limit the number of lawyers in the legislative and executive branches of the government. Our system was designed for lawyers to have their primary role in the Judicial Branch of our government. The other two branches need to provide for a better cross-section of representation roughly paralleling the percentages of those occupations in the private sector. This amendment would also prohibit individuals from unduly leveraging public sector experience or position for private sector gain. I know this needs work and is only a rough concept, but I think it provides the picture.

    I believe these two amendments along with the break-up of the central banking cartel would go a long ways towards getting us back on the track intended by our founding fathers and that has served us well when allowed to work as intended.

    A. Harrington

  56. Wes Herman says:

    Why is it that John Kennedy saw the Fed for what it is and signed Law 4 months prior to his death ending the Fed? Why is it Abe Lincoln saw the Fed for what it is and rather than pay it’s usurious rates printed Greenbacks to fund and win his war? Why is it that Andrew Jackson saw the first iteration of the “Fed ” The Bank of the US, for what it was, and he campaigned and won election on a platform based upon putting the privately held Debt Cartel out of existence? But, most importantly, why can’t anyone seem to see that the privately owned Fed created the problem we face today? Who holds all the debt that has been created since the Fed was put into place by an illegal minority of Senators and Congressmen in 1913?

    • Wes Herman says:

      who will moderate it? You. If the founding fathers had moderated the Declaration of Independence to avoid the death sentence declared by the King, where would we e today? Is this the time to moderate the bject truth when we stare such perilous possibilities in the face?

  57. eric taylor says:

    I agree with the Shah that regulators need more power to do
    a good job, but I hope that partisan politics can be cleaned
    out of the way in the doing!

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