Agency’s ’04 Rule Let Banks Pile Up New Debt

I've long been impatient with people who assert that our chief problem is too much government regulation, and this is a perfect example of why.

Friday's Times has a long, meaty article detailing how a key SEC ruling in 2004 let investment banks throw caution to the winds by removing the rules about how much debt banks could take on. The reasoning was that the banks were grown-ups and would know how to watch out for their own best interest.

They used financial modeling software to assess risks. The author of that software wrote to the SEC saying that removing those regulations was a really bad idea - the software the banks would be using to "watch out for their own best interest" couldn't anticipate severe turbulence, as had happened in 1987 and 1998. The SEC never replied.

At the time, some regulators questioned whether investments would be secure enough. A senior staff member said the SEC would hire the best minds, including people with strong quantitative skills to parse the banks’ balance sheets. It never happened.

With cash reserve requirements removed, some banks ran up their debt to 33 times their actual amount of cash. Imagine if you had $10,000 of life savings and you took on debt of $330,000!

A good friend of many years, with whom I differed on several points, used to assert that government should just get off the back of business. He also objected to taxes in all forms. I wonder how he's reconciling that, now that taxpayers are bearing the brunt of the irresponsible businessmen who made those choices, and the other irresponsible people who failed to hire those quantitative experts.

Debate party (last Friday) at Boston's ICA

Wellllll, lookie here, isn't this fun!

Last Friday, Boston's new Institute of Contemporary Art hosted a live remix of the Presidential debate. (Live remix means geeks in the back room would be intercepting the life feed of the debate and scrambling its parts into a semi-psychedelic six-screen experience.)

My company's founder, Marco Peterson, invited me to go along, suggesting meanwhile that the occasion would require an attitude appropriate to a Samoan attorney.

Well, I gave up psychedelics long ago, but I did happen to have a conspicuous Mexican hat in the back seat of my car, left over from a wonderful party hosted by long-lost friend Pete Moloney a week earlier. So I grabbed the hat, went inside and had a good time.

Today Marco sent me a link to a column in the Boston Phoenix about the event. And lookie here!

Downstairs there were some serious politicos watching closely, others (including me) fading in and out of the debate, and a handful of cats dancing while the late night DJs warmed up quietly. One guy who fell into the latter group was wearing a sombrero, which was great since I’d forgotten mine. It was official – ReConstitution was the dopest debate party I’ve ever been to ....

Dude! My sombrero made a Phoenix writer say it was his dopest debate party ever??

It's all part of the job, sir. We just do what we see must be done.

A tip of the Happy Hat to Marco for putting me in the appropriate mental space TO see and do what must be done. And a re-tip to Pete for handing out the hats at his party's door!

Disgusting SEIU ad against my hospital

A post on Paul Levy's blog about SEIU, a union I've mentioned before, led me to look into a new web site they've started, to slander Levy himself and the whole hospital.

As the post describes, they've put up signs at bus stops implying that the hospital is full of corruption and malfeasance, with a companion web site: "eyeonBI.org". I saw a "Share Your Story" link and went there to say how much I (and every employee I've spoken with) like the hospital, but look what I saw: (click to enlarge)



If you're not already familiar with this story, which has been going on for ages, it's summed up in the many comments on Paul's post.

Several months ago in a comment on a similar post I told an SEIU organizer "This gives organized labor a bad name. Why not go after some evil company??" And to me giving organized labor a bad name really is a problem. But, as shown in a link on Paul's post, it appears the union's leadership has ethical troubles of its own now:

The president of the Service Employees International Union said this week that he plans to consult with two labor reform groups in an effort to clean up his scandal-stained organization, beginning with a new ethics code and an internal watchdog commission.

But leaders of both groups said Wednesday that they were skeptical of Andy Stern's proposals.

"Why does he need a new code of ethics?" said Herman Benson, founder of the Assn. for Union Democracy. "People didn't know that what they were doing was wrong? It's preposterous."

More on Kathleen Parker

Phooey. The link didn't show up in my earlier post. Here it is: http://article.nationalreview.com/?q=MDZiMDhjYTU1NmI5Y2MwZjg2MWNiMWMyYTUxZDkwNTE=

Conservative commentary on Sarah Palin

Kathleen Parker, a respected conservative columnist, has written a column on Sarah Palin's candidacy that is worth reading before tonight's debate. Nothing terribly new, but it does come from a thoughtful source on the right.

Some good questions for the VP debate

The NY Times Op-Ed editors asked people with knowledge of the vice presidency, the candidates and their records to suggest questions they’d like to hear answered from the stage at Washington University in St. Louis this evening. Just reading the questions is informative, about both candidates.
Questions for the Next Vice President

The gasping dollar

In the past, the value of the dollar was tied to gold - it had real value, $35/ounce. In 1971 we went off the gold standard. I've never been entirely clear what the reasoning was; all I can say is, I'm glad I bought my college class ring before then - it's an ounce of gold. Now the value of the dollar isn't tied to anything real, and the US dollar price of gold is one measure of the world's belief in the American economy.

Various web sites will let you track the history of the price of gold through the years. During the Clinton years the price of gold dropped from $329 to $265 - the dollar became 20% stronger. It was the first time since 1979 it had been that strong.

Today, in just 7.5 years, it's exploded to $869. Your dollar is worth 3.3 times less in the world market than it was when W took office. From http://goldprice.org/live-gold-price.html:

I'll have more to say later about why I think this is happening. (It's not all Bush policies.)

"We've had quite enough recklessness already this century"

Interesting, thoughtful review of a few issues that I think bear considering. 12 minutes.



Let's stop being binary: The first 1:45 is an expression of something I've long felt - that we as a country have become far too binary - someone is great or abysmal. (This commentator had simply written that Palin did "great" in her Charles Gibson interview, and got flooded with angry emails.)

Palin's experience: The next 7:45 considers the suggestion that her experience is normal for VPs. I think the commentator twists Palin's words a little but the review he presents is worth considering. In his view, relevant experience would be (1) significant experience focusing on federal issues, or (2) significant executive experience, typically being governor for a significant time.

The 20% issue: 20% of all VPs (9/46) have acceded to the Presidency. Since McCain is the oldest candidate ever and he has health challenges, the odds of his VP taking over can't be less than that 20%.

I'm not 100% certain I agree with everything this guy says, but I like that he seems thoughtful, seems to consider things.

I chose his closing line for the title of this post: "We've had quite enough recklessness already this century."

Salon: The Sarah Palin Pity Party

http://www.salon.com/mwt/feature/2008/09/30/palin_pity/

Well written column. A bit long but easy to read. Sheds light on some confusing reactions columnists have had about Palin's recent embarrassing problems in the spotlight; points out that she's a tough politician who knows how to cut up a moose, didn't hesitate a moment to accept McCain's offer - "a politician who took the national stage and sneered at the work of community activists."

The whole thing is worth reading; here's an excerpt:

Sept. 30, 2008 | Is this the week that Democrats and Republicans join hands -- to heap pity on poor Sarah Palin?

At the moment, all signs point to yes, as some strange bedfellows reveal that they have been feeling sorry for the vice-presidential candidate ever since she stopped speaking without the help of a teleprompter. Conservative women like Kathleen Parker and Kathryn Jean Lopez are shuddering with sympathy as they realize that the candidate who thrilled them, just weeks ago, is not in shape for the big game. They're not alone. The New Republic's Christopher Orr feels that Palin has been misused by the team that tapped her. In the New York Times, Judith Warner feels for Sarah, too! And over at the Atlantic, Ta-Nehisi Coates empathizes with intelligence and nuance, making clear that he's not expressing pity. Salon's own Glenn Greenwald watched the Katie Couric interview and "actually felt sorry for Sarah Palin." Even Amy Poehler, impersonating Katie Couric on last week's "Saturday Night Live," makes the joke that Palin's cornered-animal ineptitude makes her "increasingly adorable."

I guess I'm one cold dame, because while Palin provokes many unpleasant emotions in me, I just can't seem to summon pity, affection or remorse. ...

I don't want to be played by the girl-strings anymore. Shaking our heads and wringing our hands in sympathy with Sarah Palin is a disservice to every woman who has ever been unfairly dismissed based on her gender, because this is an utterly fair dismissal, based on an utter lack of ability and readiness.

Waking Up Is Hard To Do

OMG.

How often do my two after-work passions come together? Singing and healthcare? (And they're from Minnesota, no less, like me.) A group of nurse anesthetists, singing medical parodies.



(From the amazing Toni Brayer MD, via KevinMD, all brought to my attention by Paul Levy. Looks like these boys are goin' viral in the medical blogosphere.)