Comments on: Volcker Calls for Regulation, Questions Loyalties of GSEs http://www.nakedcapitalism.com/2008/05/volcker-calls-for-regulation-questions.html Mon, 23 Nov 2009 02:08:55 -0500 http://wordpress.org/?v=2.8.4 hourly 1 By: Doug http://www.nakedcapitalism.com/2008/05/volcker-calls-for-regulation-questions.html#comment-8085 Doug Thu, 15 May 2008 12:24:00 +0000 http://www.nakedcapitalism.com/2008/05/volcker-calls-for-regulation-questions-loyalties-of-gses/#comment-8085 In a world where shareholder value fundamentalism reigns supreme, and the Fed's single answer to all problems is to 'save the shareholders of the capital markets', why exactly should we condemn GSEs for using shareholder value as the trump card for all strategies and choices?<br/><br/>The executives and other employees of the GSEs have chosen this new orthodoxy. This is what they, as people, believe in and stand for. It is core to their character as people and as Americans.<br/><br/>And, it is the rule, not the exception, for most executives and other employees in the vast majority of companies.<br/><br/>Any who believe in changing this had better get used to the challenge of getting people -- in their role as executives and employees -- to make some core shifts in values.<br/><br/>Can regulation help? Yes. Can criminalization help? Yes.<br/><br/>But, it will take more than either of those to cause executives and employees to choose new strategies and approaches that remove shareholder value as 'king of the hill' and put it and other values on an equivalent footing as the basis for sustainable success in markets. In a world where shareholder value fundamentalism reigns supreme, and the Fed’s single answer to all problems is to ’save the shareholders of the capital markets’, why exactly should we condemn GSEs for using shareholder value as the trump card for all strategies and choices?

The executives and other employees of the GSEs have chosen this new orthodoxy. This is what they, as people, believe in and stand for. It is core to their character as people and as Americans.

And, it is the rule, not the exception, for most executives and other employees in the vast majority of companies.

Any who believe in changing this had better get used to the challenge of getting people — in their role as executives and employees — to make some core shifts in values.

Can regulation help? Yes. Can criminalization help? Yes.

But, it will take more than either of those to cause executives and employees to choose new strategies and approaches that remove shareholder value as ‘king of the hill’ and put it and other values on an equivalent footing as the basis for sustainable success in markets.

]]> By: Richard Kline http://www.nakedcapitalism.com/2008/05/volcker-calls-for-regulation-questions.html#comment-8084 Richard Kline Thu, 15 May 2008 12:20:00 +0000 http://www.nakedcapitalism.com/2008/05/volcker-calls-for-regulation-questions-loyalties-of-gses/#comment-8084 *wow* To me, this sounds like a major _revision_ of Volker's position, using the same language and tone of voice. My impression of his earlier statements was that he felt that the Fed was operating beyond the firelight of its legal authorization and by so doing extending a dangerous and lasting blank check to the financial industry. True enough. Now, he seems to be saying, Let's expand the legislation to get this undesireable extention of authority within the law and properly governed. If that isn't a restatement, I couldn't tell you what is. He doesn't seem to like it anymore now than a few weeks ago---but he seems to accept it. *wow* To me, this sounds like a major _revision_ of Volker’s position, using the same language and tone of voice. My impression of his earlier statements was that he felt that the Fed was operating beyond the firelight of its legal authorization and by so doing extending a dangerous and lasting blank check to the financial industry. True enough. Now, he seems to be saying, Let’s expand the legislation to get this undesireable extention of authority within the law and properly governed. If that isn’t a restatement, I couldn’t tell you what is. He doesn’t seem to like it anymore now than a few weeks ago—but he seems to accept it.

]]> By: Rory http://www.nakedcapitalism.com/2008/05/volcker-calls-for-regulation-questions.html#comment-8073 Rory Thu, 15 May 2008 03:36:00 +0000 http://www.nakedcapitalism.com/2008/05/volcker-calls-for-regulation-questions-loyalties-of-gses/#comment-8073 Volcker said. “This new system has failed the test of the marketplace.” It appears to me that the marketplace failed to test the new system. People buying securities that they didn't understand with risks that they couldn't gauge. Was it Warren Buffet or someone else who advised, "Don't invest in businesses that you don't understand"? A marketplace founded on ignorance cannot provide any useful regulation of risk or assessment of value. What can we do but try regulation? Volcker said. “This new system has failed the test of the marketplace.” It appears to me that the marketplace failed to test the new system. People buying securities that they didn’t understand with risks that they couldn’t gauge. Was it Warren Buffet or someone else who advised, “Don’t invest in businesses that you don’t understand”? A marketplace founded on ignorance cannot provide any useful regulation of risk or assessment of value. What can we do but try regulation?

]]> By: Anonymous http://www.nakedcapitalism.com/2008/05/volcker-calls-for-regulation-questions.html#comment-8072 Anonymous Thu, 15 May 2008 00:55:00 +0000 http://www.nakedcapitalism.com/2008/05/volcker-calls-for-regulation-questions-loyalties-of-gses/#comment-8072 “out serving the interests of their shareholders?” <br/><br/>This country and it's financial structure are hosed. Profit no matter how it is made is acceptable, a system for the rich by the rich. Politically, economical, socially and morally this country is bankrupt and a total collapse is what it will take to fix it. Any bandied that is used just to cover the rot for a short time and will not last. Both political parties are evil and equally responsible as are the American people who voted for them and allowed this to happen. “out serving the interests of their shareholders?”

This country and it’s financial structure are hosed. Profit no matter how it is made is acceptable, a system for the rich by the rich. Politically, economical, socially and morally this country is bankrupt and a total collapse is what it will take to fix it. Any bandied that is used just to cover the rot for a short time and will not last. Both political parties are evil and equally responsible as are the American people who voted for them and allowed this to happen.

]]> By: Chicago Boss http://www.nakedcapitalism.com/2008/05/volcker-calls-for-regulation-questions.html#comment-8070 Chicago Boss Thu, 15 May 2008 00:47:00 +0000 http://www.nakedcapitalism.com/2008/05/volcker-calls-for-regulation-questions-loyalties-of-gses/#comment-8070 Bernanke = Moral Hazard Incarnate<br/><br/>He will do all of the dirty work before being replaced. See, no more moral hazard!<br/><br/>Just like in the movies... Bernanke = Moral Hazard Incarnate

He will do all of the dirty work before being replaced. See, no more moral hazard!

Just like in the movies…

]]> By: eightnine2718281828mu5 http://www.nakedcapitalism.com/2008/05/volcker-calls-for-regulation-questions.html#comment-8066 eightnine2718281828mu5 Wed, 14 May 2008 21:01:00 +0000 http://www.nakedcapitalism.com/2008/05/volcker-calls-for-regulation-questions-loyalties-of-gses/#comment-8066 Frome June 3, 1987; prescient.<br/><br/>---<br/>President Reagan, in a short appearance at the White House briefing room, said he had accepted Mr. Volcker's decision 'with great reluctance and regret'<br/><br/>--snip--<br/><br/>The main philosophical difference between Mr. Volcker, a Democrat, and Mr. Greenspan, a Republican, appears to be in their views of the structure and regulation of the banking system. Mr. Volcker has tended to resist deregulation of banks while Mr. Greenspan is more favorably disposed to it. <br/>---<br/><br/><br/>http://tinyurl.com/3zxlr3 Frome June 3, 1987; prescient.

—
President Reagan, in a short appearance at the White House briefing room, said he had accepted Mr. Volcker’s decision ‘with great reluctance and regret’

–snip–

The main philosophical difference between Mr. Volcker, a Democrat, and Mr. Greenspan, a Republican, appears to be in their views of the structure and regulation of the banking system. Mr. Volcker has tended to resist deregulation of banks while Mr. Greenspan is more favorably disposed to it.
—

http://tinyurl.com/3zxlr3

]]> By: Peripheral Visionary http://www.nakedcapitalism.com/2008/05/volcker-calls-for-regulation-questions.html#comment-8063 Peripheral Visionary Wed, 14 May 2008 19:45:00 +0000 http://www.nakedcapitalism.com/2008/05/volcker-calls-for-regulation-questions-loyalties-of-gses/#comment-8063 The simple problem with any effort to reform the Federal Reserve is that they are currently viewed (by the markets and also by themselves) as the saviors of the economy. Not until the Fed is exposed as being unable to control the economy will any calls for reform gain traction. The simple problem with any effort to reform the Federal Reserve is that they are currently viewed (by the markets and also by themselves) as the saviors of the economy. Not until the Fed is exposed as being unable to control the economy will any calls for reform gain traction.

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