One of the problems of the Financial Reforms before Congress is that simple things are not being done. It harkens back to the days of the Antitrust case against Microsoft. All sorts of breakup scenarios were tried-ballooned and then time ran out as Bush was declared President. Simple things like saying the IE browser and IIS server groups would become Open Source with an initial funding of $200 million by Microsoft for support were not contemplated. So for ten years and counting the computing and web development world have had to suffer the security trials and obsolescence tribulations that has been the IIS server and the IE browser in their many guises. Well ditto for Financial Reforms – hence the open display of power currently exercised by financial lobbyists further strengthened thanks to the Supreme Court’s no-holds-barred-on-campaign-financing decision.
Simple financial reforms are bypassed.
For example:
1) No bank, hedge fund or financial institution may have leverage or cumulative debt/loss exposure beyond 16 times their capital base.
2)No financial institution issuing a financial contract may diminish its holdings/liability for that original contract under 10 percent.
3)No financial institution may collect the last 15% of fees for services rendered until the contract is concluded.
4)All financial institutions compensation and bonus payments beyond $2million[base amount to be indexed to inflation] must have a proportionate payout over not less than average exposure life of contacts/transactions worked on or 2 years[whichever is greater] and must be subject to clawback provisions for non-performance.
These are simple, measurable, and well understood financial reforms. Some were in place until the gutting of financial reforms over the past 20-30 years. But the key is that these provisions can be easily monitored and controlled.
Measures and Monitoring Are being Bypassed
Worse than simple being ignored is the latest news on financial reform. Monitoring and measuring the effectiveness of any of the Congressional Financial Reforms will not be supported by stress tests or any regular measuring/monitoring controls. Now – want any other proof that Financial Reform is being carefully diluted, denatured and railroaded by the financial lobbyists?