Former SEC Chairman Levitt On the SEC & Federal Reserve
Former SEC chairman Levitt talks on Bloomberg about the SEC, the Fed and new oversight initiatives. It seems apparent that without offending the current bureaucracies, Levitt is telling us what really needs to happen. That is we need to go further in reform of credit rating agencies - specifically that agencies should not be compensated by debt issuers - and we shouldn't grant more oversight to the Fed because of their involvement in this crisis.
Those two key points are the exact two things I wrote about just a few days ago. Neither are being addressed. One needs to understand what we are witnessing. As I have written, when under attack, the first thing any bureaucracy will do is attempt to save itself. And, to perpetuate the status quo. That is what we see in the heretofore actions of the Fed, the SEC, the Treasury Secretary and the U.S. financial system. Because those organizations disproportionately have access to the media, they have the pulpit and will try to assuage society that they have the problems under control. They don't. They caused the problems.
First, their response was to tell everyone that all was well. I wrote about this early last fall when the entire Presidential economic team made a first ever joint media appearance. The message? The world is great. That's it. So, they've never made a joint media appearance and out of the blue they decide to get together to tell us how wonderful the global economy is? No other motives? With their busy schedules? As I wrote then, I think not. Then they told us the global economy would pull us through. Then they old us the markets would solve this problem. Then they told us regulation would choke off the innovation of America's financial system and create job losses. Then they told us they wanted to grant more powers to the status quo. Then they told us some changes would take place but not the changes that are needed. That's about where we are. Generally we see one step forward and two steps back. Crisis will push change over the top. Crisis will kill the status quo. And, ultimately, that will be the medicine the system needs. The status quo still doesn't get it. They will. And while it will be too late to save the economy, ultimately that change will be good for all of us. Denial ain't just a river in Egypt.
A point of fact is that one seldom uses the same strategy to get out of a crisis that was used to get in it. And, almost never do the same people provide the new leadership required to make effective change. Asking those responsible for much of this mess to fix it is a little like asking someone with a chocolate addiction to guard the Godiva chocolate facility. The status quo is under assault. And, that's a good thing for everyone. Including those resisting change.
Those two key points are the exact two things I wrote about just a few days ago. Neither are being addressed. One needs to understand what we are witnessing. As I have written, when under attack, the first thing any bureaucracy will do is attempt to save itself. And, to perpetuate the status quo. That is what we see in the heretofore actions of the Fed, the SEC, the Treasury Secretary and the U.S. financial system. Because those organizations disproportionately have access to the media, they have the pulpit and will try to assuage society that they have the problems under control. They don't. They caused the problems.
First, their response was to tell everyone that all was well. I wrote about this early last fall when the entire Presidential economic team made a first ever joint media appearance. The message? The world is great. That's it. So, they've never made a joint media appearance and out of the blue they decide to get together to tell us how wonderful the global economy is? No other motives? With their busy schedules? As I wrote then, I think not. Then they told us the global economy would pull us through. Then they old us the markets would solve this problem. Then they told us regulation would choke off the innovation of America's financial system and create job losses. Then they told us they wanted to grant more powers to the status quo. Then they told us some changes would take place but not the changes that are needed. That's about where we are. Generally we see one step forward and two steps back. Crisis will push change over the top. Crisis will kill the status quo. And, ultimately, that will be the medicine the system needs. The status quo still doesn't get it. They will. And while it will be too late to save the economy, ultimately that change will be good for all of us. Denial ain't just a river in Egypt.
A point of fact is that one seldom uses the same strategy to get out of a crisis that was used to get in it. And, almost never do the same people provide the new leadership required to make effective change. Asking those responsible for much of this mess to fix it is a little like asking someone with a chocolate addiction to guard the Godiva chocolate facility. The status quo is under assault. And, that's a good thing for everyone. Including those resisting change.
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