Here's the scenario: Its 2001. Congress proposes a new bill that calls for $150,000,000 to heavily bolster regulation in the financial markets. Be honest, how do you vote?
Letting people treat the financial markets like the Wild West was always going to end in disaster but unfortunately the situation we find ourselves in is the natural evolution of human greed,not just the 'evil' bankers but also the greedy scumbags piling all their money into hedge funds wanting massive returns without any thought about how it is achieved or who gets hurt.
Exactly! Its that "natural evolution of human greed" that makes us so great...but at the same time...so flawed.
I also think that electronic trading,in hindsight,was developed prematurely.When trades are executed with total anonymity and you hear about HFs just switching on their programs in the morning and only checking sporadically throughout the day to see how much they are up/down it has to take some credibility away from the markets in general. Unfortunately though it caused a domino effect,the Exchanges welcomed them with open arms because of all the volume they did but like any saturated market,they couldn't sustain it but needed to keep making profits - there's only one way that scenario can end.
If there is anything that comes out of this mess, I hope it is the realization that regulation can not fix a broken model.
You don't need money. You need will. The DOJ has will. this is, unfortunately, the Achille's Heel of any democracy. It'll never change. I hear they're looking at Politicians, as well as Regulators, Brokers, HedgeFunds and Company Officers. The regulation has always been there. Hear the Congressman yesterday? "We need to find who passed the ban on the uptick rule." Find one of those public prision companies. Great future. Btw, give Congress 150 million, or billion, whatever you meant, and they'll steal that too.
It's not as simple as portrayed. It never is. As Scott Turrow wrote, the media sees things in black and white ignoring the greys. Many of the "greedy" hf customers were pension funds. Most of these pensions are restricted by their charter to just small amounts in "risky" stock market investments. The lion's share is dedicated to fixed income. The typical pension fund is under funded. Against the backdrop of generally higher rates in the 70's-90's most of these funds made an assumption of 8% a year returns via Treasuries, corporate bonds ect. As rates plunged earlier in the decade these funds were FORCED to chase higher returns. Instead they own a lot of toxic waste. They were less motivated by "greed" than "need."