Open Response To Senator Levin
We will see who is stronger; big banks or the Senate. Here is what needs to be the end result.
- No bank can be too big to fail.
- The banking industry needs to be broken up also for the sake of allowing the industry to operate as a free market. Right now the market is controlled by an oligopoly of large banks whose major objective is to keep the oligopoly alive.
- Improve regulations. Even Milton Friedman, the economist of choice of most republicans, believed that the governments' role in the free markets was to be the umpire. " Rational self-interest" as described by Adam Smith in his book Wealth of Nations described an economy where both the producer and consumer was looking out for their own self interest and this resulted in the best outcome for the country as a whole. For this to work, the free market needs an umpire. Presently are umpires have become too lax.
Sent: Thu, April 15, 2010 7:36:14 AM
Subject: My Hearings Investigating the Financial Crisis
Dear Mr. Banicki:
I thought you might be interested to know that, on Tuesday morning, the Senate Permanent Subcommittee on Investigations, which I chair, held the first in a series of four hearings aimed at unraveling the causes and consequences of the recent financial crisis.
The crisis was not an act of nature; it was a man-made economic assault that cost millions of jobs, evaporated billions of dollars in retirement savings and put our nation in the worst economic tailspin since the Great Depression.
Extreme greed was the driving force of the crisis. And, it will happen again unless we change the rules.
Our hearings are based on a year-long bipartisan investigation conducted by the Subcommittee. The first hearing focused on the role of high risk loans, using Washington Mutual Bank as a case history. It showed how the bank originated and sold hundreds of billions of dollars in high risk loans to Wall Street in return for big fees, dumping toxic mortgages into the U.S. financial system like polluters dumping poison in a river.
The next three hearings will look at the role of regulators, credit rating agencies, and investment banks in contributing to the financial crisis. The Subcommittee will present additional case histories to examine each stage of the assault.
The goals of the hearings are threefold: to construct a public record of the facts to deepen public understanding of what happened and to hold some of the perpetrators accountable; to inform the current legislative debate about the need for financial reform; and to provide a foundation for building better defenses to protect Main Street from the excesses of Wall Street.
My opening statement from Tuesday morning’s hearing goes into more detail and is available at [http://www.levin.senate.gov/newsroom/release.cfm?id=323765].