Financial reform or burn your money

Do you have money to burn? Then keep filibustering



April 25, 2010 8:09 AM




www.waltonsun.com


Last week’s Sun had an advertisement for a no-hassle, no-headache bonfire the night of your choosing in Grayton Beach. Call 850-399-0590. You just need to be “a responsible adult.” Hmm … a responsible adult in Grayton at night could be hard to find.

Responsible adults are an endangered species in Washington, D.C., too. Last week, battle lines were being drawn in debate over financial services regulation in Congress. You have the right to oppose the regulations. If you are against the proposals, go to your bank, fill up a grocery bag with money (not change, the folding kind) and toss it in the next bonfire you see in Grayton.
Be creative. If you want to grill some cobia, use your money to get the fire started. Seriously there is no difference between burning your money and disagreeing with financial services regulation.

Rest assured, doctoral candidates for the next 100 years will debate and dissect the credit crisis of 2008. At the end of the day, the debacle was brought on by two things: Greed and lack of oversight. There is little we can do about the former, but ignoring the latter ensures future crises will result. If you want to burn your money, knock yourself out but please spare me, my family and our clients the pain.

From the New Deal policies circa 1930s to President Reagan’s deregulation of the savings and loan industry, U.S. taxpayers avoided huge bailouts of the financial industry. Whoa Nellie, for the last 30 years it has been bailout de jour. Taxpayers have footed the bill for the savings and loan industry, the meltdown of Long-Term Capital Management, the junk-bond industry implosion and the mother-of-all bailouts ushered in by the credit crisis of 2008.

Ron Lieber is a Wall Street columnist and has taken financial advisors like myself to task. “How did you miss the collapse?”
It’s a fair question.
I did not realize the inmates ran the asylum. Alan Greenspan simply believed in no regulation at all and thought markets were self-correcting. Greenspan now admits that he “made a mistake” (NY Times, Oct 24, 2008). Plus there was an opaque market in derivatives, clouded in secrecy and completely unseen even with Superman’s x-ray vision. Warren Buffet found himself befuddled by derivatives and even he was shocked by their impact on the economy.

Fierce opposition to regulation is led by Republicans and funded by investment banks, insurance companies and large broker-dealers. Unfortunately for the GOP, the same week they announced their disagreement, the Securities and Exchange Commission sued Big Kahuna Goldman Sachs for fraud regarding collateralized mortgage obligations. Bad timing, guys.

Democrats don’t exactly deserve superlatives since Connecticut Sen. Dodd’s bill is pretty weak tea, but at least it is a well-intentioned attempt to regulate and to monitor derivatives, a.k.a. weapons of financial mass destruction. Democrats (The Party of Timid) have a 59-41 lead and think they are losing. If their Republican counterparts want to filibuster on behalf of Goldman Sachs and the crew that brought us the Great Recession, let them.

Rest assured, lobbyists for the financial services industry are working diligently against the interests of hard-working American families. If you like burning your money, don’t let me stop you. If you don’t want to see your money go up in smoke, support common-sense regulations.

Buz Livingston is a certified financial planner. He operates Livingston Financial Planning Inc. focusing on hourly financial planning and investment management. Contact him directly at 850-267-1068 or at buz@LivingstonFinancial.net.