While conservatives always rail against regulation, we’ve seen what happens when greed is allowed to run the store. From the auto industry to the financial services industry, greed hasn’t proved to be a reliable, sustainable business model.
Government didn’t wake up until the 5 alarm fire had burned Wall Street to the ground. The “bold moves” that we’ve seen so far- have done little to protect the taxpayer, while throwing all our efforts into saving the wealthy titans who’ve taken us for this ride.
Even the recent credit card regulations that were passed- are too little, too late. The ability to pay off the higher part of an outstanding balance first- won’t take effect till, get this, 2010!
The New York Times has a great article talking about the rise and fall or our financial system, where people who don’t actually make things- were making money hand over fist. It’s well worth the read- here’s an excerpt:
Clearly, the entire financial industry is in the midst of a makeover. And while no one wants to call it nationalization, perhaps we can agree on this much: The money business as we have come to know it over the last two decades — with its lush salaries, big-swinging risk-takers and ultrathin capital cushions — is a goner.
Got that? Toast. Toe-tagged.
And that’s a good thing, because maybe we can go back to a banking model that is designed to do more than simply enrich the folks at the top of the enterprise while shareholders and taxpayers absorb all the hits.
Banking, because it oils the crucial wheels of commerce, has a special standing in our world. That will always be the case.
While the taxpayers have been funding the bailout, with interest rates dropping like a rock, there has been no similar drop in Credit card rates. If you want to stop foreclosures, this should have been one of the first places Congress stepped in. Forcing banks who take the bailout to take lower interest rates on credit cards, and new policies of stopping fines for over the limit (just stop the charging) or jumping rates for late payments (freeze charging, cut credit limit instead)- would have done more to stop the foreclosure crisis (since credit cards are cash of last resort for debtors) than any payroll tax break or tax rebate.
Unfortunately, the banking lobby is more powerful than common sense.
Regulation will come, but by the time the lobbyists get done, it’ll be so screwed up that it won’t solve anything. To repeat myself: Greed is not a sustainable business model.