LOL! This is the greatest thread ever written…..Im OTFLMAO

“Look at what they call sleeper cells,” he says. “That’s a fantastic idea. Now we have to create a structure of volunteers, of sleeper cells, all around the country. In case of disaster, you just wake up the sleeper cell, and they’ll know what to do.”

LOL!

Yes. And not realizing that the unregulated market in loans exists and usually functions very efficently: Somebody (often with a name like “Vinny the Squirrel”) makes sure loans and interest get paid, instead of whining about “should the regulators allowed us to loan other people’s money out on unpayable terms” or bailouts.

If the regulated market for loans wasn’t so poorly regulated, and/or the goals the regulators were attempting to serve were more sensible; perhaps the unregulated market wouldn’t be so ugly.

I’d really like to see what the loan sharks’ business has been like the past decade, though: I suspect their legally operating competition has encroached on many of their traditional customers.

I feed free market corn to my parakeet and the residuals rain down on free market paper shreds. I ask free markets for a pension and one is delivered, just like pizza. I get ill and go to free market and he sells me expensive drugs and cheap cigarettes. I went to free markets for a house and got a loan for 800K, even though I pick strawberries for a living.

Then I tried marrying free markets. WOW. Talk about being taken to the cleaners!

The real debate on Basel 2 at the moment is over the way it enshrines credit ratings at the heart of the capital adequacy rules right at the moment the credibility of those ratings is in question. But nobody wants to do over the whole thing, since it took 10 years and countless millions of dollars to get this far.

Luckily, free market capitalism continues to gain market share in government itself. The free marketeers clearly have the ear of Bernanke, Paulson et al. And, both the administration and congress are working closely with free marketeers to ensure we get free market, voluntary innovations in response to the securitization and slow growth patch of choppy waters.

Personally, I’m with John McCain. If it takes a hundred or a thousand years, we need to stay the course to make sure free markets become even freer.

These idiots would have allowed many of the big banks (which were already undercapitalized as a result of CDO/MBS losses) to lower their capital requirements by more than 50%.

The regulators’ logic (or lack thereof) behind this is:

“I don’t know (or don’t understand) what’s on the books of the banks—therefore let them set their own capital requirements”.

I totally agree with the last comment.

Anyway, here’s really what needs to be done. Regulators need to assign the amount of capital that banks hold. Period. Having the banks decide is laughable. I happened to have a hand in discussions about implementation of Basel II at a bank a few years back; it was – of course – how to create the models so they were in the bank’s favor and capital requirements were minimal. What else should regulators expect? The bank’s CEO is paid in stock; you think he’s going to want to hold lots of capital for risks he doesn’t even understand?

Regulators need to decide. A corollary is that they need to be able to understand every product in a bank’s books, in order to be able to assign a risk rating. Or, if they can’t understand it, an extremely punitive amount of capital needs to be held.

This will naturally be the end of IBing as we know it, but that will be a good thing.