You’re right – you didn’t.

I interpreted the phrase “make the packagers liable for any subprime deal that was mis-sold” as a reference to events in the past. Reading the post behind the link, I see that you actually meant “make future packagers liable for any subprime deal that they mis-sell.” I apologize for the confusion.

However, I still doubt that any further entanglement between the litigation and financial industries would be a net positive, except of course for the former.

A broad property of today’s judicial system is that it wildly exaggerates its power to produce fair and predictable outcomes. For example, the above sentence requires two definitions to achieve any kind of precision: “subprime” and “mis-sell.” Imagine constructing a robust, precise definition of these terms. For the second, you have essentially required your judicial system to produce a definition of the word “bad.” It is certainly capable of trying.

One way to think about judiciability is to imagine a prediction market for judicial decisions. A problem is judiciable if the market’s forecasts are (a) reliable, and (b) based on the details of the case, not the identity or predilections of the judge.

If you abuse the judiciary system by applying it to nonjudiciable problems, you have created either (a) a regime of arbitrary and extortive coin-toss barratry, or (b) another great way for empowered interests to dine on their weaker enemies. I’d like to think that, as a liberal, you consider neither of these desirable outcomes.

No one, including this blogger, has suggested that assignee liability be made retrospective.

I find it rather interesting that those who are so gung-ho on regulation in general become so dogmatically libertarian on this one little point…

Bullshit. The industry knew exactly what they were doing, just like they know now. This statement is the big lie that will impede the progress of regulatory enforcement that is so desperately needed.

The Fed, in it’s herculean effort to save the system, is ensuring it will continue. Had they simply utilized the tools at hand several years ago, the markets would not be in the mess.

The Federal Government, at the behest of the industry, invoked a 19th century law to stop the states’ attorney generals from regulating predatory lending practices. Any suggestion that the financial corruption was an accident is laughable.

The executive branch is responsible for enforcing the laws of the land. There are plenty of regulatory tools in place to stop the predatory financial industry in its tracks.

Where is the proof of this assertion?

We need to insist on proof — or, in its absence, retort loud, clear and with empirical evidence, that the assertion is as baseless a piece of ideological PR as every other effort by the right wing whose only interest is winning and lining their own pockets.

Financial innovation, as actually practiced, went well beyond the Minsky moment. Does that make all financial innovation bad? No. But, the only financial innovations that accrue to the whole economy’s benefit would be those that don’t reach Minsky moments.

How to achieve that?

Only with regulation.