Dylan Ratigan of CNBC points out the same Secretary Paulson who is trying to clean up the mess in our markets, lobbied the government while at Goldman Sachs in 2000 to change the leverage limits placed on financial institutions:
"Dylan introduces a pair of quotes from Hank Paulson when he was the CEO of Goldman Sachs back in 2000. They follow:
“We and other global firms have, for many years, urged the SEC to reform its net capital rule to allow for more efficient use of capital. This is the single most important factor in driving significant parts of our business offshore, so that our firms can remain competitive with our foreign competitors risk-based capital standards must become the norm. " - Goldman Sachs, CEO Hank Paulson, Feb. 29, 2000...." http://www.cnbc.com/id/27217313/
Transforming a dollar of capital into forty dollars of capital is "efficient"? Keep in mind it's the leveraging that allowed the housing meltdown to crash the markets and economy. The same CNBC story reported some remarks by Morgan Stanley CEO John Mack on how reckless Wall Street firms were in leveraging their assets:
"One year ago, Morgan Stanley ran leverage at some 30-times, Mack said. This means for every dollar of capital the firm had, it carried some $30 in debt. Morgan currently sits at "slightly below 20-times leverage," he said. With the $9 billion investment from Mitsubshi UFJ Financial Group and future federal aide, Mack expects leverage to fall into the teens.
Mack indicated he now questions whether it was wise to maintain such a high leverage ratio, and he noted that other financial institutions abroad had leverage ratios of as much as 40 or more..."
The current Secretary pushed for the rule changes causing this disaster. The Bush administration changed the rule in 2004. When the whole thing blew up, the Secretary demanded we bail out his buddies on Wall Street without ANY judicial review (thank goodness THAT was changed). He became Secretary after he cashed out of Goldman Sachs to the tune of $500 million. He resisted any limits on executive compensation and has refused to prosecute anyone involved. The esteemed Secretary ignores any discussion of making balance sheets more transparent, as firms are still allowed to keep these toxic deals off of the books. Meanwhile, no one has been indicted or forced to give back their ill-gotten gains. Money is thrown at the problem while common sense is thrown out the window.
2 comments:
I believe you meant to say "it's" instead if "its," Stupid.
What a tough crowd. No respect. No respect.
I called AAA and they towed me away.
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