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Reply #37: The Fed IS the Systematic Risk Regulator, Although Perhaps Not a Good One [View All]

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Demeter Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Mar-26-09 08:11 AM
Response to Reply #33
37. The Fed IS the Systematic Risk Regulator, Although Perhaps Not a Good One
http://www.prospect.org/csnc/blogs/beat_the_press_archi...

If a bank with a security guard is successfully robbed, that does not mean the bank did not have a security guard. It just means that the security guard was not effective.

The Fed has been acting as the systematic risk regulator for the U.S. financial system. How else can we explain the decision of Alan Greenspan to intervene in the unraveling of the Long-Term Capital Hedge Fund or his intervention to stop the 1987 stock market crash?

Obviously, the Fed fell down on the job big time in the current crisis, but that is no reason to pretend that we did not have a risk regulator. If we want to avoid having this sort of problem happen again, we have to start by acknowledging that we did have a risk regulator who was unable to perform its job for some reason, just as the problem for the bank was that its security guard was for some reason unable to prevent the robbery.

--Dean Baker
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  -STOCK MARKET WATCH, Thursday March 26 ozymandius  Mar-26-09 04:38 AM   #0 
  - Market WrapUp  ozymandius   Mar-26-09 04:41 AM   #1 
  - Today's Reports  ozymandius   Mar-26-09 04:44 AM   #2 
  - Initial claims 652K. GDP slightly less bad than expected at -6.3.  Pale Blue Dot   Mar-26-09 07:34 AM   #34 
     - line item reports:  UpInArms   Mar-26-09 07:52 AM   #36 
  - Oil rises in Asia on positive US data, stocks  ozymandius   Mar-26-09 04:47 AM   #3 
  - Congress Passes Wide-Ranging Bill Easing Bank Laws  ozymandius   Mar-26-09 04:52 AM   #4 
  - While We Are Revising History--40 Years Ago The Fed Monetized the Debt  Demeter   Mar-26-09 06:45 AM   #18 
  - Great Society? Ok. Can't resist playing this:  Ghost Dog   Mar-26-09 08:44 AM   #41 
     - When logic and proportion have fallen sloppy dead.  tclambert   Mar-26-09 09:31 AM   #43 
     - Chasing the Rabbit, and you know you're going to fall...  Ghost Dog   Mar-26-09 09:36 AM   #46 
     - Excellent theme song for this thread--Thanks!  Demeter   Mar-26-09 11:18 AM   #63 
  - Wow...  Hissyspit   Mar-26-09 07:12 AM   #28 
  - That deserves its own thread to be kicked and recommended to the highest heights.  Roland99   Mar-26-09 10:48 AM   #54 
  - Sources: Extensive regulatory overhaul planned  ozymandius   Mar-26-09 04:57 AM   #5 
  - Obama Backs Banks, Seeks to Block State Fair-Lending Crackdown  spotbird   Mar-26-09 01:29 PM   #70 
     - Makes One Wonder Which Side the Prez is On, Doesn't It?  Demeter   Mar-26-09 04:59 PM   #79 
        - And of course some of us have been wondering. . . .  Tansy_Gold   Mar-26-09 07:23 PM   #87 
  - Economy shows positive signs but it may not last  ozymandius   Mar-26-09 05:11 AM   #6 
  - Ahh... Here's news on another part of the GDP algorithm. (my apologies for the wonkish flurry)  ozymandius   Mar-26-09 05:15 AM   #7 
  - So, export military aircraft and parts?  Ghost Dog   Mar-26-09 08:51 AM   #42 
     - Yes and No.  ozymandius   Mar-26-09 07:25 PM   #88 
  - How can the economy show positive signs when ..  janedum   Mar-26-09 07:11 AM   #26 
     - The only reason I  burf   Mar-26-09 07:49 AM   #35 
     - You're absolutely right. People need jobs.  tclambert   Mar-26-09 09:42 AM   #48 
  - Debt: 03/24/2009 11,046,928,257,010.20 (UP 5,216,712,704.86) (Small plus FICA.)  Festivito   Mar-26-09 05:19 AM   #8 
  - Debt: 03/25/2009 11,037,916,881,157.83 (DOWN 9,011,375,852.37) (Moslty FICA.)  Festivito   Mar-26-09 02:36 PM   #74 
  - White House team to overhaul fiendish US tax code (fiendish?)  ozymandius   Mar-26-09 05:25 AM   #9 
  - Ah, yes, I remember well when Reagan did a tax overhaul.  tclambert   Mar-26-09 06:57 AM   #20 
  - Oh, there are good graphs, too!  tclambert   Mar-26-09 07:14 AM   #30 
  - I remember the press conference signing ceremony on tee-vee.  ozymandius   Mar-26-09 07:30 PM   #89 
  - IRS challenges AIG unit tax deals: report  UpInArms   Mar-26-09 07:11 AM   #27 
  - Treasuries Fall as Stocks Gain, Cutting Demand Before Auction  ozymandius   Mar-26-09 05:33 AM   #10 
  - Optimism over U.S. economy boosts Asia stocks  Ghost Dog   Mar-26-09 06:00 AM   #14 
  - Futures UP Huge this a.m. .. Spring Rally in Full Force!!  janedum   Mar-26-09 07:07 AM   #22 
  - Welcome Aboard, Jane!  Demeter   Mar-26-09 07:09 AM   #25 
  - Poor, Timmay. Time to call for the calvary?  54anickel   Mar-26-09 10:26 AM   #51 
     - Cavalry, not Calvary  Demeter   Mar-26-09 11:06 AM   #58 
        - DOH! Sorry, wasn't thinking - as usual.  54anickel   Mar-26-09 11:13 AM   #60 
           - It makes a good innuendo, though. You can be my "straight man" any time!  Demeter   Mar-26-09 11:18 AM   #62 
  - UPDATE 2-IBM to cut 5,000 jobs in U.S. - sources  ozymandius   Mar-26-09 05:36 AM   #11 
  - Toyota says U.S. sales still weak, Honda delays plant  ozymandius   Mar-26-09 05:38 AM   #12 
  - Nikkei hits 2-1/2-mth high on U.S. recovery hopes  Ghost Dog   Mar-26-09 06:05 AM   #16 
  - We knew this would happen. Big Banks are gaming the Geithner plan.  ozymandius   Mar-26-09 05:45 AM   #13 
  - I mentioned this a few days ago...  radfringe   Mar-26-09 06:17 AM   #17 
  - hmmm, Kind of similar to a ponzi scheme?n/t  newfie11   Mar-26-09 07:15 AM   #31 
  - More Like Money Laundering and Raiding the Public Purse, Again  Demeter   Mar-26-09 08:21 AM   #40 
  - Related, recommended:  Ghost Dog   Mar-26-09 10:53 AM   #55 
  - Gotta run.  ozymandius   Mar-26-09 06:01 AM   #15 
  - London G20 Summit: Last chance before global geopolitical dislocation (LEAP/E2020)  Ghost Dog   Mar-26-09 06:51 AM   #19 
  - Brazil's Lula: Crisis will worsen if G20 fails  Ghost Dog   Mar-26-09 10:42 AM   #52 
  - Currency issues will be discussed at G20-UK's Brown  Ghost Dog   Mar-26-09 10:43 AM   #53 
  - Poll on main belgian financial paper's website  BelgianMadCow   Mar-26-09 11:43 AM   #66 
     - I think We'd Be A Better Country Without That Burden  Demeter   Mar-26-09 05:04 PM   #80 
  - I read LEAP/2020 as well - the public parts, that is. And I expect the G20  BelgianMadCow   Mar-26-09 11:20 AM   #64 
  - I think what they say makes a lot of sense. & I'm not at all hopeful.  Ghost Dog   Mar-26-09 03:59 PM   #76 
  - New reserve currency could come quickly-Stiglitz  Ghost Dog   Mar-26-09 04:22 PM   #77 
  - Arianna Huffington: Take the Steering Wheel out of Geithner's Hands  Demeter   Mar-26-09 07:04 AM   #21 
  - EXACTLY..  sendero   Mar-26-09 07:14 AM   #29 
  - he he he he he he he he he he he he he he he  Tansy_Gold   Mar-26-09 08:18 AM   #38 
     - She is a Corker, sometimes, that Arianna  Demeter   Mar-26-09 08:20 AM   #39 
  - Slouching Towards Solvency: The system of securitizing loans became a doomsday machine. Robert Kuttn  Demeter   Mar-26-09 07:07 AM   #23 
  - That Screams Out for a Rimshot  Demeter   Mar-26-09 05:06 PM   #81 
  - dollar watch  UpInArms   Mar-26-09 07:08 AM   #24 
  - Quantitatively Easing into a Stupid Idea By The Mogambo Guru  Demeter   Mar-26-09 07:16 AM   #32 
  - Obama to tighten screws on Wall Street: officials  UpInArms   Mar-26-09 07:24 AM   #33 
  - The Fed IS the Systematic Risk Regulator, Although Perhaps Not a Good One  Demeter   Mar-26-09 08:11 AM   #37 
  - Wall St clampdown in prospect, Europe data gloomy  Ghost Dog   Mar-26-09 09:32 AM   #44 
  - Geithner unveils sweeping rules for financial firms  Ghost Dog   Mar-26-09 09:35 AM   #45 
  - Thomas Frank: The "Populists: are Right About Wall Street  antigop   Mar-26-09 09:41 AM   #47 
  - That article by Frank is an excellent read, isn't it....  KoKo   Mar-26-09 10:11 AM   #50 
  - this is good  DemReadingDU   Mar-26-09 11:13 AM   #59 
  - Blast from the past..Dorgan: Very Risky Business (Derivatives)  antigop   Mar-26-09 09:58 AM   #49 
  - What gets me is that he wasn't just some lone voice crying in the wilderness on this stuff.  54anickel   Mar-26-09 10:57 AM   #56 
     - Dorgan wasn't a lone voice...but he was one of the few in the Senate who spoke out  antigop   Mar-26-09 11:01 AM   #57 
        - Oh Yes, The POPULISTS Warned  Demeter   Mar-26-09 11:17 AM   #61 
           - Morning Marketeers....  AnneD   Mar-26-09 01:58 PM   #71 
  - Remember Boehner's "Savings and Recovery Act" I posted about yesterday....  antigop   Mar-26-09 11:42 AM   #65 
  - Hey SMW people  Danascot   Mar-26-09 11:45 AM   #67 
  - That's a good collage  specimenfred1984   Mar-26-09 01:10 PM   #69 
  - Talk economics or Finance...  AnneD   Mar-26-09 02:02 PM   #72 
  - Anyone heard CNBC or Fox crediting Obama w/the recent ~20% rise in the markets?  Roland99   Mar-26-09 11:49 AM   #68 
  - I Doubt Obama Would Want Credit For Mass Hysteria or Delusion  Demeter   Mar-26-09 05:09 PM   #82 
  - IRS launches crackdown on offshore tax evasion, says it'll let criminals go free  specimenfred1984   Mar-26-09 02:31 PM   #73 
  - Is the Bail Out Breeding a Bigger Crisis?  Danascot   Mar-26-09 02:40 PM   #75 
  - That's a Negatory on the Advisors Understanding, Good Buddy  Demeter   Mar-26-09 05:11 PM   #83 
  - How Dare you ask for Cash  DemReadingDU   Mar-26-09 04:53 PM   #78 
  - NPR Has a Docudrama About Seizing a Bank  Demeter   Mar-26-09 05:38 PM   #84 
  - I found the link  DemReadingDU   Mar-26-09 06:25 PM   #85 
  - Abbra-Cadabbra  RUMMYisFROSTED   Mar-26-09 07:06 PM   #86 
  - close  ozymandius   Mar-26-09 07:57 PM   #90 
 

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