The regulators, themselves are also bankers. Or have strong tires to bankers. Kind of hard to ask the SEC (for example) to come down hard on say, Goldman, when most of the executive staff at the SEC worked and have their own positions at Goldman.
(I'm only using Goldman as a example).
But the opposite is also true. The best regulator is a experienced regulator. And you get that experience by working in the field.
A better approach is punishment. Look I used to trade (on the CMO floor at Kidder), and the more important thing is not to lose money. If traders (actually everyone in banking) don't lose money nothing changes. I mean, why ruin a good thing, right? Just that simple.
It used to be easier, because before 1999 investment banks were a sort of a partnership - if you lost money the firm lost money. Now so these days. Why even care? Traders take such stupid risks cause it's not their money. And now, we all know, they don't even face any sort of punishment. In fact, most of the banks MADE money, in the form of TARP (and cheap loans from the Fed).
And now we have Libor. No trader has gone to jail. No executive has gone to jail (and I doubt anyone will). The bank (in this case Barclays) might have to pay a fine, which is peanuts compare to their profits.
So what's the message? Steal, loot, lie. And until people are made to pay, personally, it will remain so.
> In fact, most of the banks MADE money, in the form of TARP (and cheap loans from the Fed).
Claiming the banks made money off of TARP is like claiming I made $600k last year because I took out a mortgage. TARP provided loans to banks that were paid back with interest.
Actually up front you are correct. BUT the banks also used those loans (which by the way, were granted with VERY favorable terms at VERY low rates) to pay bills due to other banks
Take AIG for example.. Banks made billions on payouts from AIG. Where did the money for those payouts come from? Us. The American taxpayer. So not only did the banks get their bad debts marginalized (at our expense. example: look at the sale of Bear Stearns to JP. Who assumed most of Bears' junk debt in that deal.. that's right, the tax payer.); they also got cheap cash at cheap rates; and all the inter-banks fees were paid.
In other words, the whole mess was a giant shell game. I have no doubt that some bankers knew exactly what they were doing during the whole mess. They played the Fed, Treasury and us.
And the got away with it. And they will again.
Make no mistake, the game is rigged. And not in your (the masses) favor.
(I'm only using Goldman as a example).
But the opposite is also true. The best regulator is a experienced regulator. And you get that experience by working in the field.
A better approach is punishment. Look I used to trade (on the CMO floor at Kidder), and the more important thing is not to lose money. If traders (actually everyone in banking) don't lose money nothing changes. I mean, why ruin a good thing, right? Just that simple.
It used to be easier, because before 1999 investment banks were a sort of a partnership - if you lost money the firm lost money. Now so these days. Why even care? Traders take such stupid risks cause it's not their money. And now, we all know, they don't even face any sort of punishment. In fact, most of the banks MADE money, in the form of TARP (and cheap loans from the Fed).
And now we have Libor. No trader has gone to jail. No executive has gone to jail (and I doubt anyone will). The bank (in this case Barclays) might have to pay a fine, which is peanuts compare to their profits.
So what's the message? Steal, loot, lie. And until people are made to pay, personally, it will remain so.