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	<title>Comments on: A more comprehensive look at Obama’s proposed financial reforms</title>
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		<title>By: dd</title>
		<link>http://www.nakedcapitalism.com/2009/06/more-comprehensive-look-at-obamas.html#comment-49218</link>
		<dc:creator>dd</dc:creator>
		<pubDate>Fri, 19 Jun 2009 03:12:35 +0000</pubDate>
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		<description>It&#039;s really about inefficient debt pricing. CDS is just a free ride on that inefficiency. For example, money market fund investors holding securitized products believed that credit risk was priced into structured products but discovered it had been siphoned off in CDS transactions (or alternatively that the anticipated due diligence had not been performed but &quot;hedged&quot; in a unmargined forward). Investors then abandoned MMF in droves resulting in the 3.2T government guarantee. &lt;br /&gt;Investors are not now risk adverse; but rather understand CDS have distorted the risk pricing in bond products and so they&#039;ve abandoned impacted instruments and fled to the most creditworthy debt instruments unimpaired by CDS activity. &lt;br /&gt;Once the MMF guarantees are gone it&#039;s game over and the remaining investors will flee to insured deposits and &quot;riskless&quot; government debt. And what&#039;s Treasury&#039;s solution? To turn money markets into mutual funds and create a CDS CCP? Exactly how will that convince money market fund investors that their money is safe or fund managers that securitized products are low risk liquid investments?</description>
		<content:encoded><![CDATA[<p>It&#39;s really about inefficient debt pricing. CDS is just a free ride on that inefficiency. For example, money market fund investors holding securitized products believed that credit risk was priced into structured products but discovered it had been siphoned off in CDS transactions (or alternatively that the anticipated due diligence had not been performed but &quot;hedged&quot; in a unmargined forward). Investors then abandoned MMF in droves resulting in the 3.2T government guarantee. <br />Investors are not now risk adverse; but rather understand CDS have distorted the risk pricing in bond products and so they&#39;ve abandoned impacted instruments and fled to the most creditworthy debt instruments unimpaired by CDS activity. <br />Once the MMF guarantees are gone it&#39;s game over and the remaining investors will flee to insured deposits and &quot;riskless&quot; government debt. And what&#39;s Treasury&#39;s solution? To turn money markets into mutual funds and create a CDS CCP? Exactly how will that convince money market fund investors that their money is safe or fund managers that securitized products are low risk liquid investments?</p>
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		<title>By: skippy</title>
		<link>http://www.nakedcapitalism.com/2009/06/more-comprehensive-look-at-obamas.html#comment-49214</link>
		<dc:creator>skippy</dc:creator>
		<pubDate>Thu, 18 Jun 2009 23:47:25 +0000</pubDate>
		<guid isPermaLink="false">http://www.nakedcapitalism.com/2009/06/a-more-comprehensive-look-at-obama%e2%80%99s-proposed-financial-reforms/#comment-49214</guid>
		<description>Next election [?] Hell Iranian&#039;s and the French have a &quot;bigger set&quot; than Americans, you may not agree with their govements, but they act and not just moan about it.&lt;br /&gt;&lt;br /&gt;Word verification is &quot;ges/aus&quot; lol with Yves in Germany. &lt;br /&gt;&lt;br /&gt;&lt;br /&gt;Wie rechnet man I &quot;ges aus&quot;?&lt;br /&gt;&lt;br /&gt;Ich habe mal eine Frage: Wie rechnet man I ges für einen Stromkreis, der Parallel-und Reihenschaltungen enthält aus? &lt;br /&gt;Ich konnte leider kein Bild hochladen, aber ich versuchs mal so: &lt;br /&gt;___________R6 ___________ &lt;br /&gt;I I &lt;br /&gt;= ___R2______ I &lt;br /&gt;I___R1 ___I__R4______I_____I &lt;br /&gt;I__R5__R3__I &lt;br /&gt;&lt;br /&gt;Die I-Striche sind noch Kabel! Und wie man sieht gibt es 6 Wiederstände. &lt;br /&gt;Falls die Zeichnung doch nichts wird erklär ich es nochmal: &lt;br /&gt;Nach R1 kommt ein Knotenpunkt mit einer Parallelschaltung von R2 , R4 und (R5 + R3) , (die wiederum in Reihenschaltung in der Parallelschaltung sind) danach folgt ein weiterer Knotenpunkt und es kommt nur noch R6. (ich hoffe man kann das so verstehn?!) &lt;br /&gt;&lt;br /&gt;Ich vermute, dass sich das irgendwie mit der Kirchhoffschen Regel lösen lässt, aber ich bin mir nicht ganz sicher wie die dann aussehen soll, weil hier ja alles verschachtelt ist! &lt;br /&gt;&lt;br /&gt;Ich hoffe, dass mir jemand weiterhelfen kann!!!</description>
		<content:encoded><![CDATA[<p>Next election [?] Hell Iranian&#39;s and the French have a &quot;bigger set&quot; than Americans, you may not agree with their govements, but they act and not just moan about it.</p>
<p>Word verification is &quot;ges/aus&quot; lol with Yves in Germany. </p>
<p>Wie rechnet man I &quot;ges aus&quot;?</p>
<p>Ich habe mal eine Frage: Wie rechnet man I ges für einen Stromkreis, der Parallel-und Reihenschaltungen enthält aus? <br />Ich konnte leider kein Bild hochladen, aber ich versuchs mal so: <br />___________R6 ___________ <br />I I <br />= ___R2______ I <br />I___R1 ___I__R4______I_____I <br />I__R5__R3__I </p>
<p>Die I-Striche sind noch Kabel! Und wie man sieht gibt es 6 Wiederstände. <br />Falls die Zeichnung doch nichts wird erklär ich es nochmal: <br />Nach R1 kommt ein Knotenpunkt mit einer Parallelschaltung von R2 , R4 und (R5 + R3) , (die wiederum in Reihenschaltung in der Parallelschaltung sind) danach folgt ein weiterer Knotenpunkt und es kommt nur noch R6. (ich hoffe man kann das so verstehn?!) </p>
<p>Ich vermute, dass sich das irgendwie mit der Kirchhoffschen Regel lösen lässt, aber ich bin mir nicht ganz sicher wie die dann aussehen soll, weil hier ja alles verschachtelt ist! </p>
<p>Ich hoffe, dass mir jemand weiterhelfen kann!!!</p>
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		<title>By: jerrydenim</title>
		<link>http://www.nakedcapitalism.com/2009/06/more-comprehensive-look-at-obamas.html#comment-49210</link>
		<dc:creator>jerrydenim</dc:creator>
		<pubDate>Thu, 18 Jun 2009 18:34:16 +0000</pubDate>
		<guid isPermaLink="false">http://www.nakedcapitalism.com/2009/06/a-more-comprehensive-look-at-obama%e2%80%99s-proposed-financial-reforms/#comment-49210</guid>
		<description>Hugh,&lt;br /&gt;&lt;br /&gt;Your comment is dead on. My thoughts exactly.&lt;br /&gt;&lt;br /&gt;Obama gave the best, most pitch-perfect speech about financial reform at Cooper-Union NYC during his campaign.  Obama spoke eloquently and with ease about the need to reinstate a new 21st century Glass-Stegall and how Wall Street was not the friend of Main Street, how Mom and Pop must be protected from powerful unregulated hedge funds and the vicious short-selling traders who only profit through speculation and manipulation. It sounded so good. On stage with Obama that day was an impressive cast of economic talent/clout. Highly respected anti-neolibs like Volcker and I think Stiglitz were present but then paradoxically, so was the free-market/neo-liberal crowd like Larry Summers and Robert Rubin, the very man who was almost solely responsible for killing Glass-Stegall in the first place. ( I think we all know the rest of the story) So I wondered which economists on stage that day were the real Obama economists and which ones were the campaign props?  &lt;br /&gt;&lt;br /&gt;I got my answer sooner than I expected.  If anyone thinks the current Obam economic crew is interested in real change I&#039;m just wondering what information you&#039;re basing that on? Rubin protogeges and quant fund Neo-liberal Larry who helped create our current mess by dreaming up our de-industrialized, financialized hedge-fund economy do not have the vision, the moral authority, the inclination or the motivation to get us out of this mess. For all of his talk about change and despite being handed a golden opportunity to deliever change due to the financial crisis, Obama has hitched his cart to the old Clintonista bankster cabal which seeks to maintain the status quo at any cost. Just as there could be no honest revaluation of Iraq policy with Rumsfeld at Defense there will be no change in US economic/financial policy as long as Geithner and Summers are at the wheel.   When is the next election?</description>
		<content:encoded><![CDATA[<p>Hugh,</p>
<p>Your comment is dead on. My thoughts exactly.</p>
<p>Obama gave the best, most pitch-perfect speech about financial reform at Cooper-Union NYC during his campaign.  Obama spoke eloquently and with ease about the need to reinstate a new 21st century Glass-Stegall and how Wall Street was not the friend of Main Street, how Mom and Pop must be protected from powerful unregulated hedge funds and the vicious short-selling traders who only profit through speculation and manipulation. It sounded so good. On stage with Obama that day was an impressive cast of economic talent/clout. Highly respected anti-neolibs like Volcker and I think Stiglitz were present but then paradoxically, so was the free-market/neo-liberal crowd like Larry Summers and Robert Rubin, the very man who was almost solely responsible for killing Glass-Stegall in the first place. ( I think we all know the rest of the story) So I wondered which economists on stage that day were the real Obama economists and which ones were the campaign props?  </p>
<p>I got my answer sooner than I expected.  If anyone thinks the current Obam economic crew is interested in real change I&#39;m just wondering what information you&#39;re basing that on? Rubin protogeges and quant fund Neo-liberal Larry who helped create our current mess by dreaming up our de-industrialized, financialized hedge-fund economy do not have the vision, the moral authority, the inclination or the motivation to get us out of this mess. For all of his talk about change and despite being handed a golden opportunity to deliever change due to the financial crisis, Obama has hitched his cart to the old Clintonista bankster cabal which seeks to maintain the status quo at any cost. Just as there could be no honest revaluation of Iraq policy with Rumsfeld at Defense there will be no change in US economic/financial policy as long as Geithner and Summers are at the wheel.   When is the next election?</p>
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		<title>By: Bill H</title>
		<link>http://www.nakedcapitalism.com/2009/06/more-comprehensive-look-at-obamas.html#comment-49209</link>
		<dc:creator>Bill H</dc:creator>
		<pubDate>Thu, 18 Jun 2009 18:17:18 +0000</pubDate>
		<guid isPermaLink="false">http://www.nakedcapitalism.com/2009/06/a-more-comprehensive-look-at-obama%e2%80%99s-proposed-financial-reforms/#comment-49209</guid>
		<description>Ed, here&#039;s your addition:&lt;br /&gt;&lt;br /&gt;[Update: the reason I stress the term &#039;clearinghouse has to do with Obama Administration opposition to making OTC derivatives exchange-traded. A clearinghouse is not enough. An exchange is more than a clearinghouse and involves standardization of contracts and regulation.]&lt;br /&gt;&lt;br /&gt;All &#039;exchanges&#039; come with bundled clearing houses or CCPs. CME, LIFFE, NASDAQ, NYSE, LSE are all examples.&lt;br /&gt;&lt;br /&gt;The history of the exchange dates back to early last century where physical commodities were traded.&lt;br /&gt;&lt;br /&gt;&#039;clearing&#039; or a CCP was introduced to decouple the risk of trading with the risk of settlement - how can you trust the person you trade with? The CCP introduces a risk based environment which using various methods tries to eliminate credit risk (amongst others).&lt;br /&gt;&lt;br /&gt;Since 2005 the DTCC has developed with the OTC industry the Trade Information Warehouse, which now captures 96% of OTC credit contracts (such as CDS) in a STANDARDISED form. The other 4% are &#039;non standard&#039;.&lt;br /&gt;&lt;br /&gt;Recent progress with ICE in the US has brought central clearing to these contracts, giving the exact benefits you suggest above without the need for a centralised electronic market place, or &#039;exchange&#039;.&lt;br /&gt;&lt;br /&gt;Likewise in the Rates and Equities space, the contracts are also rapidly being brought onto fully electronic platforms for confirmation and also clearing. SwapClear from LCH.Clearnet is another example of a CCP for STANDARDISED interest rate swaps.&lt;br /&gt;&lt;br /&gt;Your assertion that an &#039;exchange&#039; is the solution doesn&#039;t ring true, as practically the goal of standard contracts and risk reduction via a CCP have already been demonstrated in the market.&lt;br /&gt;&lt;br /&gt;Standard regulation is something also delivered by the CCPs, as they are based on US or UK law for all the members of each - a level playing field.&lt;br /&gt;&lt;br /&gt;I refute your logic that an exchange is the answer, and suggest that the rapid improvements in the OTC processing space and the expansion of clearing will deliver what you suggest, without a centralised trading platform.&lt;br /&gt;&lt;br /&gt;Happy to discuss ;-)  www.linkedin.com/billhodgson&lt;br /&gt;&lt;br /&gt;Bill.</description>
		<content:encoded><![CDATA[<p>Ed, here&#39;s your addition:</p>
<p>[Update: the reason I stress the term &#39;clearinghouse has to do with Obama Administration opposition to making OTC derivatives exchange-traded. A clearinghouse is not enough. An exchange is more than a clearinghouse and involves standardization of contracts and regulation.]</p>
<p>All &#39;exchanges&#39; come with bundled clearing houses or CCPs. CME, LIFFE, NASDAQ, NYSE, LSE are all examples.</p>
<p>The history of the exchange dates back to early last century where physical commodities were traded.</p>
<p>&#39;clearing&#39; or a CCP was introduced to decouple the risk of trading with the risk of settlement &#8211; how can you trust the person you trade with? The CCP introduces a risk based environment which using various methods tries to eliminate credit risk (amongst others).</p>
<p>Since 2005 the DTCC has developed with the OTC industry the Trade Information Warehouse, which now captures 96% of OTC credit contracts (such as CDS) in a STANDARDISED form. The other 4% are &#39;non standard&#39;.</p>
<p>Recent progress with ICE in the US has brought central clearing to these contracts, giving the exact benefits you suggest above without the need for a centralised electronic market place, or &#39;exchange&#39;.</p>
<p>Likewise in the Rates and Equities space, the contracts are also rapidly being brought onto fully electronic platforms for confirmation and also clearing. SwapClear from LCH.Clearnet is another example of a CCP for STANDARDISED interest rate swaps.</p>
<p>Your assertion that an &#39;exchange&#39; is the solution doesn&#39;t ring true, as practically the goal of standard contracts and risk reduction via a CCP have already been demonstrated in the market.</p>
<p>Standard regulation is something also delivered by the CCPs, as they are based on US or UK law for all the members of each &#8211; a level playing field.</p>
<p>I refute your logic that an exchange is the answer, and suggest that the rapid improvements in the OTC processing space and the expansion of clearing will deliver what you suggest, without a centralised trading platform.</p>
<p>Happy to discuss <img src='http://www.nakedcapitalism.com/wp-includes/images/smilies/icon_wink.gif' alt=';-)' class='wp-smiley' />   <a href="http://www.linkedin.com/billhodgson" rel="nofollow">http://www.linkedin.com/billhodgson</a></p>
<p>Bill.</p>
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		<title>By: marsha donner</title>
		<link>http://www.nakedcapitalism.com/2009/06/more-comprehensive-look-at-obamas.html#comment-49203</link>
		<dc:creator>marsha donner</dc:creator>
		<pubDate>Thu, 18 Jun 2009 16:51:07 +0000</pubDate>
		<guid isPermaLink="false">http://www.nakedcapitalism.com/2009/06/a-more-comprehensive-look-at-obama%e2%80%99s-proposed-financial-reforms/#comment-49203</guid>
		<description>Edward...you are quoted on huffington post as one of the people who is &#039;positive&#039; on the &#039;plan&#039;...just btw.&lt;br /&gt;&lt;br /&gt;still..nothing about too big to fail...seems to be continued to be assumed they exist and might be better regulated.&lt;br /&gt;&lt;br /&gt;increased role of the FED..the FED is a private corporation, privatizing more regulations is more of the same.&lt;br /&gt;&lt;br /&gt;as long as 2 or 3 bank/brokerages can jack the markets up and down as is happening now, for example, you KNOW that BIG is NOT BETTER for us...for mainstreet.&lt;br /&gt;&lt;br /&gt;still plan is totally wall st. centric, not main st centric...no emphasis on supporting community banks, credit unions..the institutions that can really form the basis of a real economy.&lt;br /&gt;&lt;br /&gt;Edward...if your concern of the plan is LENDING then it will remain short term vision..and contradicted by your call to wait..back up and create a plan that actually addresses the systemic issues at hand.&lt;br /&gt;&lt;br /&gt;we need a Glass-Stegal act of some sort...can&#039;t everyone see the collusion between the banks, brokerages, ratings??&lt;br /&gt;when a bank/brokerage can move the market with a rating change while dealing stocks up and down within the same market what good can come of that??&lt;br /&gt;&lt;br /&gt;these are not right and left issues, they are practical issues that affect our health and well being for decades to come.&lt;br /&gt;&lt;br /&gt;screw political constraint.  propose real change that serve the people.  and IF the banks revolt and VOTE by jacking the markets down day after day..then everyone will/can see the power that still remains invested in them and not us.</description>
		<content:encoded><![CDATA[<p>Edward&#8230;you are quoted on huffington post as one of the people who is &#39;positive&#39; on the &#39;plan&#39;&#8230;just btw.</p>
<p>still..nothing about too big to fail&#8230;seems to be continued to be assumed they exist and might be better regulated.</p>
<p>increased role of the FED..the FED is a private corporation, privatizing more regulations is more of the same.</p>
<p>as long as 2 or 3 bank/brokerages can jack the markets up and down as is happening now, for example, you KNOW that BIG is NOT BETTER for us&#8230;for mainstreet.</p>
<p>still plan is totally wall st. centric, not main st centric&#8230;no emphasis on supporting community banks, credit unions..the institutions that can really form the basis of a real economy.</p>
<p>Edward&#8230;if your concern of the plan is LENDING then it will remain short term vision..and contradicted by your call to wait..back up and create a plan that actually addresses the systemic issues at hand.</p>
<p>we need a Glass-Stegal act of some sort&#8230;can&#39;t everyone see the collusion between the banks, brokerages, ratings??<br />when a bank/brokerage can move the market with a rating change while dealing stocks up and down within the same market what good can come of that??</p>
<p>these are not right and left issues, they are practical issues that affect our health and well being for decades to come.</p>
<p>screw political constraint.  propose real change that serve the people.  and IF the banks revolt and VOTE by jacking the markets down day after day..then everyone will/can see the power that still remains invested in them and not us.</p>
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		<title>By: Edward Harrison</title>
		<link>http://www.nakedcapitalism.com/2009/06/more-comprehensive-look-at-obamas.html#comment-49189</link>
		<dc:creator>Edward Harrison</dc:creator>
		<pubDate>Thu, 18 Jun 2009 10:17:46 +0000</pubDate>
		<guid isPermaLink="false">http://www.nakedcapitalism.com/2009/06/a-more-comprehensive-look-at-obama%e2%80%99s-proposed-financial-reforms/#comment-49189</guid>
		<description>Anders,&lt;br /&gt;&lt;br /&gt;Given the amount of excess reserves, the banks can repay the money without it having an effect on loans.  However, it does reduce their capital and going forward having less capital will make them less likely to increase lending.&lt;br /&gt;&lt;br /&gt;What would be problematic is if any of the banks exiting TARP found themselves undercapitalized in the future as a result of future losses.</description>
		<content:encoded><![CDATA[<p>Anders,</p>
<p>Given the amount of excess reserves, the banks can repay the money without it having an effect on loans.  However, it does reduce their capital and going forward having less capital will make them less likely to increase lending.</p>
<p>What would be problematic is if any of the banks exiting TARP found themselves undercapitalized in the future as a result of future losses.</p>
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		<title>By: Edward Harrison</title>
		<link>http://www.nakedcapitalism.com/2009/06/more-comprehensive-look-at-obamas.html#comment-49188</link>
		<dc:creator>Edward Harrison</dc:creator>
		<pubDate>Thu, 18 Jun 2009 10:07:12 +0000</pubDate>
		<guid isPermaLink="false">http://www.nakedcapitalism.com/2009/06/a-more-comprehensive-look-at-obama%e2%80%99s-proposed-financial-reforms/#comment-49188</guid>
		<description>Bill H,&lt;br /&gt;&lt;br /&gt;Obama is talking about clearinghouses because his people do not want a fully-exchange traded vehicle akin to the CME.  This is what the reference is.  An exchange is more than a clearinghouse - it involves standardization and a higher level of regulation.</description>
		<content:encoded><![CDATA[<p>Bill H,</p>
<p>Obama is talking about clearinghouses because his people do not want a fully-exchange traded vehicle akin to the CME.  This is what the reference is.  An exchange is more than a clearinghouse &#8211; it involves standardization and a higher level of regulation.</p>
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		<title>By: Anders</title>
		<link>http://www.nakedcapitalism.com/2009/06/more-comprehensive-look-at-obamas.html#comment-49185</link>
		<dc:creator>Anders</dc:creator>
		<pubDate>Thu, 18 Jun 2009 06:40:22 +0000</pubDate>
		<guid isPermaLink="false">http://www.nakedcapitalism.com/2009/06/a-more-comprehensive-look-at-obama%e2%80%99s-proposed-financial-reforms/#comment-49185</guid>
		<description>A nitpick:&lt;br /&gt;The 68 billion repaid are only a loss to lending IF they would otherwise have been lent out.&lt;br /&gt;&lt;br /&gt;The current financial climate does not make it certain, or even probable, that the money would have been lent out (other than to the Fed).</description>
		<content:encoded><![CDATA[<p>A nitpick:<br />The 68 billion repaid are only a loss to lending IF they would otherwise have been lent out.</p>
<p>The current financial climate does not make it certain, or even probable, that the money would have been lent out (other than to the Fed).</p>
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		<title>By: Bill H</title>
		<link>http://www.nakedcapitalism.com/2009/06/more-comprehensive-look-at-obamas.html#comment-49183</link>
		<dc:creator>Bill H</dc:creator>
		<pubDate>Thu, 18 Jun 2009 06:18:48 +0000</pubDate>
		<guid isPermaLink="false">http://www.nakedcapitalism.com/2009/06/a-more-comprehensive-look-at-obama%e2%80%99s-proposed-financial-reforms/#comment-49183</guid>
		<description>&quot;Forget about clearing houses...&quot;&lt;br /&gt;&lt;br /&gt;&lt;br /&gt;Is a misunderstanding of how the CME and other exchanges work.&lt;br /&gt;&lt;br /&gt;Electronic, on-exchange trading RELIES upon having a clearing house (or central counter party [CCP]) to mutualise, absorb and manage the resulting risks between the trading parties.&lt;br /&gt;&lt;br /&gt;What you&#039;ve just said is equivalent to &quot;use a car but forget about the noisy engine&quot;.&lt;br /&gt;&lt;br /&gt;Happy to provide more information, but you need to correct your article.&lt;br /&gt;&lt;br /&gt;Bill</description>
		<content:encoded><![CDATA[<p>&quot;Forget about clearing houses&#8230;&quot;</p>
<p>Is a misunderstanding of how the CME and other exchanges work.</p>
<p>Electronic, on-exchange trading RELIES upon having a clearing house (or central counter party [CCP]) to mutualise, absorb and manage the resulting risks between the trading parties.</p>
<p>What you&#39;ve just said is equivalent to &quot;use a car but forget about the noisy engine&quot;.</p>
<p>Happy to provide more information, but you need to correct your article.</p>
<p>Bill</p>
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		<title>By: bobn</title>
		<link>http://www.nakedcapitalism.com/2009/06/more-comprehensive-look-at-obamas.html#comment-49181</link>
		<dc:creator>bobn</dc:creator>
		<pubDate>Thu, 18 Jun 2009 03:47:23 +0000</pubDate>
		<guid isPermaLink="false">http://www.nakedcapitalism.com/2009/06/a-more-comprehensive-look-at-obama%e2%80%99s-proposed-financial-reforms/#comment-49181</guid>
		<description>&lt;i&gt;Arthur Levitt, a consultant to Carlyle and Goldman Sachs, is happy&lt;/i&gt;&lt;br /&gt;&lt;br /&gt;That&#039;s all I need to hear.  FAIL.</description>
		<content:encoded><![CDATA[<p><i>Arthur Levitt, a consultant to Carlyle and Goldman Sachs, is happy</i></p>
<p>That&#39;s all I need to hear.  FAIL.</p>
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