Wall Street Reform That Will Prevent The Next Financial Crisis - Senator Ted Kaufman

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http://kaufman.senate.gov/press/floor_statements/statement/?id=aca5b91a-6e51-4d6b-a367-414ad9641500

Financial regulatory reform is perhaps the most important legislation that the Congress will address for many years to come. Because if we don't get it right, the consequences of another financial meltdown could truly be devastating.

In the Senate, as we continue to move closer to consideration of a landmark bill, however, we are still far short of addressing some of the fundamental problems – particularly that of “too big to fail” – that caused the last crisis and already have planted the seeds for the next one. And this is happening after months of careful deliberation and negotiations, and just a year and a half after the virtual meltdown of our entire financial system.

Following the Great Depression, the Congress built a legal and regulatory edifice that endured for decades. One of the cornerstones of that edifice was the Glass-Steagall Act, which established a firewall between commercial and investment banking activities. Another was a federally guaranteed insurance fund to back up bank deposits. Other rules were imposed on investors to tamp down rampant speculation, like margin requirements and the uptick rule on short selling.

That edifice worked well to ensure financial stability for decades. But in the past thirty years, the financial industry, like so many others, went through a process of deregulation. Bit by bit, many of the protections and standards put in place by the New Deal were methodically removed. And while the seminal moment came in 1999 with the repeal of Glass-Steagall, that formal rollback was primarily the confirmation of a lengthy process already underway.

Indeed, after 1999, the process only accelerated. Financial conglomerates that combined commercial and investment banking consolidated, becoming more leveraged and interconnected through ever more complex transactions and structures, all of which made our financial system more vulnerable to collapse. A shadow banking industry grew to larger proportions than even the banking industry itself, virtually unshackled by any regulation. By lifting basic restraints on financial markets and institutions, and more importantly, failing to put in place new rules as complex innovations arose and became widespread, this deregulatory philosophy unleashed the forces that would cause our financial crisis.

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[maryf]

1. Tax each transaction .05%

individuals won't notice, that's 50 cents on a thousand dollars, but think of the revenue....

[Demeter]

2. Destroy Wall St.

Set the obscenely rich and powerful back 30 years--then tax them into extinction. That is the only thing that will stop the cycle and the US death spiral to 3rd world status.

[BR_Parkway]

3. Really have to wonder if they'd have let 'too big to fail" go ahead and fail

where things would be right now.

Considering the number of banks who are taking over for the one's the FDIC is closing, I find it hard to believe that they're all in terrible shape. So the regionals & locals could still be lending. And after reading about Lehman's book-cooking Repo 105's, can't help but wonder how many of the rest of the biggies are propped up on the same falsehoods