Saturday, January 23, 2010

Quick take on proposed banking Regs

Quick take on Obama's banking regulatory proposals:

  • placing limits on deposit taking institutions on leverage and size
  • prohibiting proprietary trading from deposit taking institutions

  • does not get rid of "too big to fail" syndrome
  • would not have stopped firms like Bear Stearns and Lehman Brothers from failing or being propped up, even though they are not deposit taking institutions.
  • does not address the issue of regulatory capture
  • does not address culpability of SEC, congress, and Fed in causing problem.
  • Goldman Sachs comes off as a huge winner at the expense of its competition.