As I read a recent news article I noticed a line that said “…the United States has one of the most highly regulated banking industries…” – Which, of course we know in retrospect, is a gross error and laughable. The assumption, even by most Americans, is what got us in trouble. When collaterilized debt obligations (CDO’s) hit the market the ability to make money was promulgated by greed, not regulation.
To that end a great summary of today’s problems appears in an article by Jill Treanor of the Guardian. It is recommended reading for anyone that wants to know how toxic shock spilled around the world. In part she said: “Last week First Direct, part of HSBC, withdrew all mortgages apart from those for existing customers, while other lenders are demanding bigger deposits before handing out home loans. The US is redrawing the regulatory landscape for its financial services industry as it last did after the Great Depression and the UK’s Financial Services Authority (FSA) is hiring 100 new regulators. Some bankers concede that fear is stalking the financial system and that markets have become so complicated that it is difficult to work out exactly what is going on.” Please see her article here.