Surprise, Surprise, Surprise, (Part 2)

So that’s why we need financial reform.

That’s what some have said in response to the kinds of abuses I mentioned yesterday. Surely municipalities need protection against the depredations of financial shysters.

Only, it’s already illegal to hold sham auctions and collude. New regulations wouldn’t change a thing. That may be why the biggest banks are all getting behind the proposed financial reform legislation. Surely with the Senator from Fannie Mae—Chris Dodd—leading the charge, the big banks have nothing to fear.

Seriously, Congress is in the business of getting reelected every two years. The last time we looked at serious reform in the ‘90s—privatizing the agencies, raising capital requirements—the big banks got everything they wanted: new markets, relaxed capital requirement, and new barriers to competitors. And a lot of Congressmen got VIP mortgages and special loans to constituents.

Adam Smith noted that when business-people get together, the conversation usually ends in a conspiracy against their own customers. Add legislators into the mix, and you get a witches brew of self-interest and regulatory power. But you don’t have to put up with it. Just talk to your neighborhood banker.

Douglas R. Tengdin, CFA
Chief Investment Officer
Hit reply if you have any questions—I read them all!

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By | 2014-09-05T18:18:45+00:00 March 29th, 2010|Global Market Update|0 Comments

About the Author:

Mr. Tengdin is the Chief Investment Officer at Charter Trust Company and author of “The Global Market Update”. The audio version of each post can be heard on radio stations throughout New England every weekday. Mr. Tengdin graduated from Dartmouth College, Magna Cum Laude. He received his Master of Arts from Trinity Divinity School, Magna Cum Laude and received his Chartered Financial Analyst (CFA) designation in 1992. Mr. Tengdin has been managing investment portfolios for over 30 years, working for Bank of Boston, State Street Global Advisors, Citibank – Tunisia, and Banknorth Group. Throughout his career, Mr. Tengdin has emphasized helping clients manage their financial risks in difficult environments where they can profit from investing in diverse assets in diverse settings. - Leave a comment if you have any questions—I read them all! - And Follow me on Twitter @GlobalMarketUpd

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