Financial Regulation

My Recommendations for Financial Market Reform:

Arrest Barney Frank and Chris Dodd

Repeal Dodd-Frank

Repeal Sarbanes-Oxley

Reinstitute  Glass–Steagall

Liquidate Fannie/Freddy

Investment Banks/Brokerages and Investment Management Companies may not be public corporations

The Federal Government, The US Treasury and the Federal Reserve Bank may not:

1. bail out Banks/Investment Banks Insurance Companies or Investment Funds
2. bail out Corporations
3. bail out Corporate Pension Funds on bankruptcy or liquidation
4. Reimburse or otherwise  Fund any State in excess of Federal Income taxes paid by citizens of the state

The role of the Federal Government should be to aggressively liquidate any public entity on insolvency while strictly enforcing legal creditor priority and contracts.

1. On bankruptcy or default no financial firm should be allowed to be reorganized in any form
1.  All C-level or Partner Level employees must leave the industry,
1. are banned from employment or other compensation by any Government entity
2. Corporate Board members must resign all Board Memberships (including non-profit)
1. are banned from employment or other compensation by any Government entity

Strictly Prohibit Federal Government from any form of Corporate Ownership, Investment holdings, Issuance of Insurance or Guarantee

1. Privatize PBGC and let it succeed or fail on its own

SEC role on corporate information

1. Incentivize Public Disclosure of all Corporate Information
1. All material information must be publicly disclosed within 24 hours

2. Crowd source credit ratings
3. Any security or investment transaction must be publicly disclosed including the identity of the buyer and seller and the price within 15 seconds of the transaction.

Why nobody saw the growing risk in the real estate market.

I entered business school in Chicago full-time in '91. As part of the MBA program, I was required to take part in the "Lead" program - the part of the business school's curriculum focused on developing leadership skills in future captains of industry.

The program divided the entering class into a number of cohorts, each comprised of 60 students. Cohorts held regular meetings with facilitators selected from second-year students to engage in exercises designed to develop specific aspects of leadership. At the first meeting of my cohort, the facilitators divided us into twelve teams of 5. They asked us to discuss and select an individual - historical or current - that we believed best-exhibited leadership qualities.

The group I was assigned to had a good mix of international students, including students from Chile, Canada, and Russia.  The team had two women and three men. Recall this was just after the first Gulf War under President George Bush Senior. General Schwarzkopf was mentioned, also Jack Welsh of GE, and even Margaret Thatcher.  But I had other ideas.

The facilitators asked the teams to stop and polled the room to see what 12 groups of high-achieving graduate business students could come up with.

Six teams of first-year MBAs somehow independently choose Mahatma Gandhi.

Five teams of highly educated future leaders managed to choose the Reverend Dr. Martin Luther King.

But my group choose Captain Jean-Luc Picard of the Star Ship Enterprise. Sighting him as a poet, an explorer, and a warrior. He was a proven leader and manager not just in a multicultural organization but a multi-species organization.

By the time most of these students arrive at business school, they are thoroughly indoctrinated politically correct sheep. The program is about credentialing the participants - and signaling to potential employers. Original thinkers had long since been weeded out.

The Democrats Downgrade

You argue that S&P's down grade of US Government Debt securities is politically motivated and inappropriate. You sight their mishandling of mortgage backed securities ratings preceding the real estate crash of 2007 - 2008.

But S&P is the boy who's pointing out the fact that the emperor is naked, and you are trying to hush him to hide your own embarrassment.  If S&P does not downgrade US debt they are playing the same game they played pre - 2007.

Calling them on their missed call admits what has been missing in the narrative.  The villains here were not just the greedy bankers of the narrative, but also the Rating Agencies, the US congress and the liberal press.

S&P's call forces you to adopt the new narrative.

Denying that makes you a fool. Admitting that, but claiming they are mistaken now makes you a hypocrite.

Infantile, Narcisistic Morons?

Government should not be involved in any activity that cannot be effected by citizens between the age of 18 and 30.  Any activity that cannot be effected by these citizens should be left to the private sector.

Government service should be required of all citizens for a period of at least 3 years. Service must commence prior to the age of 25 and end no later than the age of 35.  No individual may serve in government longer than 10 years.

Ethics

Your buddy has a great apartment on Park Avenue South.  He has invited you over to watch the NBA finals on his giant flat screen.  He says, "why don't you bring a six-pack of your favorite beer, and I'll buy a pizza?"

As you get off the elevator on his floor, a delivery guy gets on.  You walk down the hall to his apartment.  Just before you ring the doorbell, you notice a $100 bill on the ground outside his door.

What do you do?

1. Keep the $100 bill - if you weren't meant to have it, it wouldn't have been lying on the ground for you to find.
2. Tell your buddy that you found a $100 bill on his doorstep and offer it to with him - he must have dropped it when he was paying for the pizza.
3. Call the pizza parlor to have the delivery guy come back - obviously, as he was making change for the $100 your buddy just gave him and trying to juggle the delivery sacks, he dropped the $100 bill on the ground. Your buddy got his $80 change after paying for the pizza, and the delivery guy is out $100.

You are:

1. Qualified to be a trader
2. Qualified for sales
3. Better leave the business - there is no future for you here.