It appears that most of the members of the House Financial Services Committee, including nine Democrats and all the Republicans except the one that didn’t show up are more concerned with their big corporate clients than they are with you and I.
Things turned Orwellian in the House Financial Services Committee this week when members — with the backing of the White House — passed an investor protection bill that would make it all too easy for thousands of publicly traded companies to cook their books.
While the bill offers investors important protections — including imposing a fiduciary duty on brokers who give investment advice — an amendment was added to permanently exempt smaller public companies (worth less than $75 million) from a post-Enron auditing requirement. It passed with votes from 28 of the committee’s 29 Republicans (one was absent) and 9 Democrats. All clearly were more interested in pleasing corporate constituents than protecting investors who, last time we checked, are also constituents.
The Sarbanes-Oxley Act, passed after the Enron debacle, requires public companies to have independent auditors attest to the effectiveness of their internal controls against financial fraud. During the Bush years, the regulation-averse S.E.C. routinely exempted small public companies from the audit requirement, saying it was unduly burdensome. But research shows that the law has succeeded in reducing errors and fraud — a big plus for investors. And changes made in 2007 have made the audits less onerous for business.
For those reasons, the S.E.C.’s new chairwoman, Mary Schapiro, announced in September that the exemption would end in June. Unfortunately, the White House also appears to be more attuned to the concerns of corporate constituents than to the sensible S.E.C. chief, even though Mr. Obama chose her to run the agency. When the legislation comes up for a full vote in the House, members should strip it of this destructive amendment that only entrenches an antiregulatory policy of the Bush years… [emphasis added]
Inserted from <NY Times>
I much prefer the no nonsense approach put forward by Bernie Sanders (Hat-tip Huffington Post).
That’s a bill that will enjoy my FULL support!
8 comments:
Abandon ship everyman for himself!
Mark, unless we see some authentic reform, you're right.
Bernie is 100% right! Too big to fail is too big to exist!
while i agree breaking up the Zombies and letting the parts fail the way great britain did is the way to deal with our banks, i dont think you have solved the problem that caused the crisis until you deal with the overhanging $1,400 trillion in derivitives: First, Let’s Kill All the Credit Default Swaps
Lisa, had you been aqround during the former incarnation of this blog, you would have seen that statement from me over and over again.
RJ, I agree, I think. Are you suggesting just to void them?
i dont have any idea what you'd do; the CDSs outstanding are greater than the entire GDP of the planet right now...the chance of unwinding them neatly are slim and none...this is not going to end well...
let me come back on this, because my last comment was somewhat off the wall, trying to answer on too many threads at once...some derivatives do perform useful functions, ie corn futures allow a farmer to get his price before the crop is harvested, but some, like credit default swaps, for instance, have no social redeeming value in the way theyre used...CDS are basically an unregulated insurance policy on debt (ie, bonds) that pays off if the creditor defaults...the holders of any CDS are ususally themselves bondholders in some distressed company...but there’s no limit to the amount of exposure one can take in CDS contracts referencing a particular credit, much more than the actual debt involved, so it can be profitable to load up on CDS and then buy just enough of the actual bonds so that you can force a bankruptcy (think chrysler)...the bettor loses on the bonds he owns, but gains far more on the CDS that pay off as a result...
the link i posted above is from yves smith's naked capitalism, who's on top of the case; & she's a sharp enough blogger to get an invite from geithner & his team for coffee and chocholate cookies at the the treasury..
RJ, I can't see any solution.
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