Brilliant. A thousand times yes. Establishing rules of the game, assuring competition and market stability, protecting the government’s purse from the ravages of systemic meltodown- all strike me as reasons conservative should endorse reasonable regulation. Certainly most have benefited from the reasonable regulation of depository banks. Alas, most House conservatives see “reasonable regulation” as oxymoronic. It isn’t, though I see little hope the GOP will view things in this light.

No government or other institution with as much regulatory power as possible can repeal human greed and fear.

You want me to provide you a blow by blow account of what happended from 1980 until 2008 of what decisions were made that did improve the operations of financial markets but human greed factored in and the good that was done collapsed because of greed.

I am not even going to comment on government regulators who are a joke SEC the Fed Treasury Department. Why do you think the largest donor to both political parties in the last two election cycles was financial institutions

If you are counting BIG Government and BIG Money Banks to cut a reasonable well though out deal you are insane. When these institutions get together the US taxpayer better reach for his wallet.

Also you do realize that the US government owns AIG and Citicorp. The deal that was cut by a certain Treasury Secty when he was president of the NY Fed to rescue AIG stinks to high heaven it is rotten and I would be pushing the House of Reps to prepare artcles of impeachment against him and the newly confirmed Fed Chairman

Finally I will give you a simple solution to these problems:

1. Abolish the FED
2. Return to the gold standard of 1913 ie if no gold in vault we have no money to create with fractional reserve banking which makes Big Banks unable to become to Big to FAIL or BAIL

Kevin, you’re accusing Rick of oversimplifying the situation but being overly simplistic in your own comment. Yes, the banks were a large part of the problem, but what can you expect? The bankers are greedy, but that’s their job. They want to be free to make money with no government intervention, and who can blame them? Government regulations are a pain no matter what industry you’re in.

You’re completely ignoring the two important questions:
1. Would more/smarter financial regulation have prevented the crash?
2. Will more/smarter financial regulation prevent these situations in the future?

As Rick has made it clear, the answer to both of these is “yes.” Right now Republican leadership is completely ignoring this issue. Politically, they can’t admit that the predominantly Democratic point — that more regulation is necessary — is correct. And also politically, they can’t admit that government intervention in the private sector is good under any circumstance.

The more Republicans refuse to participate in this dialog, the more they’ll be left out of the conversation. Whatever happens with regulation, it’s going to be a deal between Democrats and bankers. It’s going to stupid and dirty, but hopefully there will be something constructive hidden in the muck.

When I take a pig to the slaughter house, I hope to take the best parts home with me and leave the stuff I wasn’t interested in behind.

Once again a very meatty post on a topic that is near and dear to my heart as a CPA and a believer in Austrian economics whose principles I am sure you are familiar.

I would only say your diagonosis of the problem is overly simplistic which is true because you are writing an opinion piece not a treatise on the causes and consequences of the collapse of Lehman Brothers and AIG.

I understand that politics is at work as part of the blame game but the ignorant Congress and clueless President in financial matters and structures that were put into place over 3 decades to construct and created financial products and services that no one understood or understands.

If you want to get a good flavor of what the financial geniuses were upto and how greed and avarice trumped common sense and reason, I would pick up a copy of When Genius Failed by Roger Lowenstein. It is an excellent summary of whatis happening today. It conncerns the rise and fall of the hedge fund Long term capital management in 1998 which collapsed because of uncontrolled speculative trades on derivatives.

Bottom line to say financial services is not regulated or evil Phil Gramm or the repeal of Glass Steagall is the cause of all our problems misses the mark entirely. I think you are understating the contribution of Fannie Mae and Freddie Mac to the current situation. They have a huge roll in this disaster as well as the large investment banks and banks like Citigroup and Goldman Sachs.

The point is the big institutions like governemnt and banks and investement banks srewed the pooch and pushed the world into a Great Depression just will not seem as bad as the 1930s, but as they say history does not repeat itself but it rhymes.

Furthermore, I am of the opinion that businesses are in fact greedy but greed also translates into an unwillingness to loose money, hence the swaps. Following that thinking, the issuing banks would not have approved risky mortgages if they had to keep them on their books. This brings me to securitization. Since the banks could sell their mortgage products to Fannie and Freddie, who would in turn securitize them and issue them into the global financial markets, the issuing banks experienced no risk but had to remain competitive. However, excessive mortgage default risk had neen introduced into the financial markets and the traders had to deal with it - Credit Default Swaps These CDS’s simply amplified an impending disaster.

I think the solution lies in why were mortgages so readily available. What allowed banks to become so risk adverse in approving mortgage applications? After all, if people had stayed current on their mortgages none of this would’ve happened. On a side note, it is interesting to chronologically follow the price of gas and the foreclosure rate.

Number two is that “conservatives should value order above all else” is frightening to me.

It might comfort you to understand that conservatives valuing order is fundamental to the DNA of people in that political spectrum. Conservative brains crave order and structure, while tending away from novelty and change.

So, saying that conservatives should value order above all else shouldn’t be frightening. That’s just the way the system works. It’s about equivalent of, “If you’re a conservative, this is how you think” and NOT “If you’re a conservative, this is how you *should* think.