No, the new accounting procedures of SO have little or nothing to do with junk securities sales. SO is about eliminating book cooking, inflating the apparent value of a company and the like.rhody said:... The Sarbanes–Oxley Act of 2002 was supposed to address this.
So you are saying, until the book cooking stops, we should not hold a CFO/CEO accountable ? They have a legal obligation to do so under SO. BTW, the second whistler blower on the Sixty Minutes segment told the CFO of his company eight days before that they were serious fraud going on, and yet eight days later the CFO signed the financial statements as accurate and true, with full knowledge that he was doing it with the penalties of SO looming. So far he has not been investigated or indicted by the Justice Department, who is NOW well aware of the problem.mheslep said:No, the new accounting procedures of SO have little or nothing to do with junk securities sales. SO is about eliminating book cooking, inflating the apparent value of a company and the like.
Eh? I only said the book cooking CEO example you referred to has nothing to do with mortgage security bundling and bubbles.rhody said:So you are saying, until the book cooking stops, we should not hold a CFO/CEO accountable ? ...
I want the Federal government out the actual business of financing home mortgages, either directly or through guarantees. This means a nearly immediate dissolution of Fannie, Freddie, and the FHA. The FHA is another disaster in process, right now, with the same platitudes from leadership saying everything they're doing is risk free and for the good of the country, the same cozy deals with congress (just raised the limit on FHA guaranteed mortgages). How do the likes of FHA get away with this? I suggest in part because of people creating misdirection by pointing to Wall Street.rhody said:What do you want
turbo said:The major problem in the US is Wall Street. They are practically unregulated, and were allowed to bundle crap into derivatives, sell them to customers AND bet against their own customers, knowing that the derivatives would fail. Why aren't the major players in jail? Even country-club jails?
The second (and perhaps more damaging) problem is the Fed. When the cry-babies on Wall Street threaten to hold their breath, the Fed lowers interest rates again and again. This free money means that the investment banks can afford to pay almost zero interest, even on very large, stable accounts. Greenspan and Bernanke have a huge responsibility for the current debt crisis because they created it by driving wealth to the wealthy. Cheap borrowing came at the expense of the US taxpayers, for the benefit of the big banks and investment firms. And it is continuing. Is the Fed ever going to start charging reasonable interest rates for the borrowing of our money? Probably not, unless the taxpayers demand it.
Well, here is one way to look at it. What incentive do people have to save money? Not invest, but save for a stable interest income? People have practically NO incentive to save because the Fed shovels free money at the banks, so the banks pay no interest to anybody else. With interest rates on savings not even keeping up with inflation, and with bogus "fees", people who save are sliding backward all the time. I could park my money in other places, but I like to stay at least somewhat liquid so that if a nice tract of land (for example) comes on the market at a fair price, I can jump on it.JonDE said:I'm not sure how to phrase this without it sounding like a smart remark, but I truly am just asking.
But in the current economic situation how do you see the feds cheap rates as coming at the expense of the tax payer? Cheap rates are good for anyone that takes a loan, not just banks. Whether it is a business loan or buying a house, it is a great time to take a loan. It is bad for people with lots of savings (cheap rates), but then again, the people that save the most, are the people that have the most and make the most.
Further the main point of cheap rates is to offer incentive to take loans, particularly areas where loans are needed for purchases, such as housing. The housing market is still very weak. One thing a lot of people don't realize is that a strong housing market is almost essential to having any kind of recovery. Historically new housing building accounts for around 5% of GDP, and coming out of most "normal" recessions, the growth in the housing market accounts for around 8% of GDP growth.