Regulate

While today's masters of the universe balk at regulation to rein in Wall Street and the big banks, prominent seers of the old guard propose a sensible return to how it used to work before Reagan and the Republicans cut them loose to gamble with our money. Elder statesmen like George Soros, Nicholas F. Brady, John S. Reed, William H. Donaldson and John C. Bogle all support regulation now, "and they may surprise you with their populism," as the New York Times reports today.

Robbery

"For years, Wall Street CEOs have thrown away customer trust like so much worthless trash," writes Harvard law professor and TARP overseer Elizabeth Warren in today's Wall Street Journal. "Banks and brokers have sold deceptive mortgages for more than a decade," Warren charges. "Financial wizards made billions by packaging and repackaging those loans into securities. And federal regulators played the role of lookout at a bank robbery, holding back anyone who tried to stop the massive looting from middle-class families. When they weren't selling deceptive mortgages, Wall Street invented new credit card tricks and clever overdraft fees."

How now brown cow?

"When the history of the Great Recession is written, they can be singled out as the bonus babies who were so short-sighted that they put the economy at risk and contributed to the destruction of their own companies," Warren concludes. "Or they can acknowledge how Americans' trust has been lost and take the first steps to earn it back."

The more things change, the more they stay the same.

Volckerie

Even Paul Volcker seems to understand what a fine mess we're in. "Adam Smith more than 200 years ago advocated keeping banks small." he cautions in today's New York Times. "Then an individual failure would not be so destructive for the economy. That approach does not really seem feasible in today’s world, not given the size of businesses, the substantial investment required in technology and the national and international reach required. Instead, governments have long provided commercial banks with the public 'safety net.' The implied moral hazard has been balanced by close regulation and supervision." Obviously we need to back off Reaganomics now and get back to the real deal. Read Volcker's full opinion here.

Freezing

"They're worthwhile but they pale relative to the size and scale of the challenge America's middle class is now facing," says Robert Reich about Obama's new plans for a three-year spending freeze and then more jobs for the middle class (easier said than done). "Obama can no longer afford to come up with lists of nice things to do," Reich continues. "At the least, he's got to do two very big and important things: (1) Enact a second stimulus. It should mainly focus on bailing out state and local governments that are now cutting services and raising taxes, and squeezing the middle class. This would be the best way to reinvigorate the economy quickly. (2) Help distressed homeowners by allowing them to include their mortgage debt in personal bankruptcy -- which will give them far more bargaining leverage with morgage lenders. (Wall Street hates this.)"

Hello?

Anybody there? What's going on? Robert Reich tries to figure it out on Wall Street, while Ruth Marcus wonders what the Supreme Court was smoking when they decided to let corporations and special interest groups virtually buy elections. It's not a pretty sight.

Refract

"Lost in this politically charged climate is the reality that the Fed, more than any other government agency, arguably stopped last fall's financial panic from becoming a global depression," observes Robert J. Samuelson today in support of Ben Bernanke's own take on reforming the Federal Reserve.

Reform

Now that the politicians are all over our financial dilemma with some half-cocked if not downright reckless solutions, the one man who knows what he's talking about is Ben Bernanke. Above all the others, he may be the one man we should be listening to now.

Money

"There’s no name plate on the building, no sign on the front desk and the armed policeman stationed outside isn’t saying who works there," according to John Arlidge in The Sunday Times. "There’s a good reason for the secrecy," he continues. "Number 85 Broad Street, New York, N.Y. 10004, is where the money is. All of it." Number 85 Broad Street is the home of Goldman Sachs, and Chairman/CEO Lloyd Blankfein believes he is doing God's work.

Derivatives

Where else would you expect to find highly sophisticated derivative wizards hiding their weenies but in the sewer? "This self-serving strategy of paying hefty secret fees to local firms with ties to county commissioners assured JPMorgan Securities the largest municipal auction rate securities and swap agreement transactions in its history," said Glenn Gordon, associate director of the SEC’s Miami office. Read all about it right here, on Bloomberg.com.

Toasted

"You can't buy a toaster in America that has a one in five chance of exploding. But you can buy a mortgage that has a one in five chance of exploding, and they don't even have to tell you about it..." observes Elizabeth Warren in today's Huffington Post. "We have consumer protection for everything you touch, taste, smell, feel... But there is no equivalent for credit cards, for mortgages; there's nothing."

Warren ought to know, because she heads the Congressional Oversight Panel for the TARP program and has long advocated for stronger consumer protections. "I teach contract law at Harvard Law School, and I can't understand my own credit card," she adds. "No, I am not kidding you."

Nobel

"The question we have to ask is who has done the most in the previous year to enhance peace in the world. And who has done more than Barack Obama?"

THORBJOERN JAGLAND, chairman of the Nobel Committee

Optional

What don't the philistines get? After all is said and done, the public option is optional. "It doesn't involve a government takeover of the health-care system," explains E. J. Dionne Jr. in today's Washington Post. "The idea is that only consumers who want to enroll in a government-run health plan would do so. Anyone who preferred private insurance could get it."

Indisposed

Since April, I have been undergoing treatment to eliminate a malignant tumor in my throat. The doctors say so far so good, but for now this treatment has prevented me from contributing to my blog, even though Wall Street is back at it again with a new scheme to bundle life insurance policies into investment bonds. Some people might say this is creative. Perhaps. But in the long run, while this may be profitable for the bankers, what do you think the odds are these bonds will become malignant for investors?

Usurious

Webster defines usury as "an unconscionable or exorbitant rate or amount of interest ; specifically : interest in excess of a legal rate charged to a borrower for the use of money." After centuries of practice by loan sharks to fleece the working poor around the world, each of our united states enacted laws regulating limits on interest charged for loans. But then, 30 years ago, the United States Supreme Court, in its infinitesimal wisdom, said what the heck, let the good times roll, at least for federally chartrered banks and their credit card loan sharks.

Now as our middle class is drowning in infinite debt, the President is trying to confront the banks on this critical issue. “The days of any time, any reason rate hikes and late fee traps have to end,” Mr. Obama told the bankers. Unfortunately, Larry Summers fell asleep in that meeting.