This week, the host had a particularly raucous bunch of guest speakers on his show this week.
Like Richard Watkins, the CEO of Liability Solutions, who joked that Dick Fuld didn’t nearly get what was coming to him:
- In the old days, if a bank went bust, they would have executed him. I think we should go back to that. We should have executed Dick Fuld.
Apparently the room of guests erupted in head-nods (we spoke to the host). Ridiculous. But other parts of the show are more serious.
Later, Mike Gasior, the CFO of AFS and an ex-Lehman guy, blamed regulators for filling the FinReg bill with fluff:
- “The Volcker Rule is gone, it’s not watered down.”
- “CDS are still allowed. And as much as there is a business purpose for CDS, it’s really not that useful, and it used to be illegal.”
And for making him want to vomit.
- “It almost makes me want to vomit as an American that these financial regulations they just passed are the biggest thing they’ve done since 1930s. They’ve done nothing since then except repeal the laws that were put in place in the 1930s.”
We zeroed in on this part of the conversation because FinReg, though it already passed this summer, is still a hot topic as banks are now in the middle of implementing its new rules into their daily routines.
Gasior clearly thinks the new rules provide no solutions to fix any of the problems inside banks that were identified by the credit crisis.
The end result of the FinReg bill will be, in his opinion, ensuring that the past 10 years, during which nothing good for happened for the markets, continue for at least 10 more.
- “Nothing that happened in the past 10 years has done anything good. The people that got those subprime loans – they shouldn’t have gotten them.”
- “Everything that happened in the past is still in place and there is nothing to prevent another crisis. End of discussion, no contest.”
And because of their failure, financial regulators, Gasior says, are the real systemtic risk to the system.
- “The systemic risk is the ability of the financial regulators to regulate. Glass-Steagall isn’t going to do much of anything nowadays. We need government regulations that will challenge the financial system.”
The fix, he says, is simple enough – hire better regulators!
- “What we need is regulators that can begin to understand. Right now, there aren’t any, and they haven’t told us what they’re planning to do to increase the quality of their personnel.”
Of course this is easier said than done, and he offered no other solutions.
Megan McArdle, on the other hand, offered one, though it’s equally disheartening (because it’s hopeless) – regulators need Wall Street salaries in order for any new rules to work.
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