Obama’s Financial Reforms: Five Reasons Why They Are Likely to Fail
By Les Leopold
The Obama Administration has put together a wide-ranging set of reforms that attempts to re-regulate the financial sector. It calls for a new consumer protection agency to protect us from mortgage mischief. For the first time, it regulates some (but not all) derivatives. It calls for new controls on “too-big-to-fail” institutions. It attempts to control out-of-control leveraging. It brings private equity firms and hedge funds under stricter supervision, and it develops new ways to monitor and (hopefully) control systemic risk.
But these measures are unlikely to prevent the next meltdown because they do not address the root causes.
1. The financial sector is bloated and will remain so.
2. Financial institutions that are Too Big To Fail will still be Too Big To Fail.
3. The derivative casino is still open for business.
4. The wealthy have too much and therefore the demand for fantasy finance gambling will continue. bubble assets.
5. The proposed regulations don’t pay us back.
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