Reply #15: That's not the financial industry amendment you need

[jmowreader]

You'll fuck everyone who has money in the financial institution, without really hurting the people who caused the need for the bailout.

Implement three commonsense reforms::

1. The financial industry has three broad segments: consumer banking (checking accounts, savings accounts and loans of all kinds), investment banking (stocks, bonds, etc.) and insurance. Require any financial house to specialize in one of the three. Right now I can walk into a Wachovia branch (that's where my money is, what there is of it) and do all three kinds of finance. I can also find "A Wells Fargo Company" under the logo, and soon the Wachovia name will be no more. The second thing is directly related to the first. Most people call this "reinstating Glass-Steagall."

2. Ban naked Collateralized Debt Obligations, Credit Default Swaps and any other naked transaction that will never require either counterparty to hold the underlying security. I like selling naked put options. A put option calls for me the seller to purchase from you the buyer w number of shares of x security for y price on or before x expiration date. If the stock price stays above the strike price this never gets executed. If the stock price goes below it, the contract gets exercised, the seller pays for the stock and the buyer uses those funds to buy it for delivery. Naked CDS are different: if LeftyMom buys a Mortgage-Backed Security and purchases a Credit Default Swap to cover her ass in case it turns out the thing is full of McMansion loans from Toledo, she then gets to sit there and watch as flvegan, me, Rabrrr, SwampRat, Parche, Chuggo, and the guy who started Hooters all buy CDS against LeftyMom's MBS. And then when LM's MBS collapses because it actually contains the mortgages on thirty-five houses made with Chinese drywall, the bank is only nine times as screwed as it otherwise would have been.

3. Forbid ever deregulating the financial services industry again.