There's a lot more in his comments than the cap issue, and he's right on.
He's saying exactly what should be done in some areas:
The provision will be part of a broader package that would likely give the Federal Reserve the authority to monitor systemic risk in the economy and to shut down financial institutions that face too much exposure, Mr. Frank said.
Also included in the legislation: registration requirements for hedge funds and proposals aimed at curbing conflicts of interest at credit-rating agencies such as Standard & Poor?s.
The bill, which the committee is working on in consultation with the Obama administration, also will require financial institutions that bundle mortgages into securities to share in potential losses. This would give banks and mortgage-specialists an incentive not to make bad loans, he said. Institutions that securitize loans improperly will incur tougher penalties.
?There have been too few constraints on major financial institutions incurring far more liability than they could handle,? Mr. Frank said.
One of the problems is the government not allowing itself to pay any attention to developing problems and taking any preventive action before this type of disaster.
Removing conflicts of interest for ratings agencies is not just a good idea, it's absud not to do that. A key factor in the current crisis is the corruption of those ratings.
Having companies incented to not sell bad derivatives by sharing in the profits or losses of what they sell - why would people object, they're happy with the current system?
Tightening up the regulation of taking on liability so that you don't have a house of cards squeezing profit in a manner that causes almost every large institution to be in danger?
Do people understand why there are insurance regulations requiring reserves and such to sell insurance for financial products - regualtions the industry circumvented when they got loopholes passed? Our 'financial services' industry should not be making 30% of the nation's profits, as they have been. That shows a level of concentrated power and corruption little better than seeing 25% of a city's businesses' budgets going to pay 'for 'protection' to a local 'protection' company. DING DING DING - mafia.
It's not always easy to say just how things are not working; businesses have a legitimate securitity budget. Cameras, police, alarms, scurity guards, IT. If that budget it 1%, no problem. if they spend 5% of the budget, it raises an issue about being excessive, why that is. If it's 25%, big red flags go up, it's likely something corrupt. Similarlyan eceonmy has a legitimate 'financial services' overhead. When that becomes 30% of profits, red flags go up. There's likely corruption going on, where things are set up for their interests.
When the price of oil skyrocketed, and then plummeted by half when the government threatened to regulate the speculators, does that gice a hint there's an issue?
It's a mistake, as the first posters did, to look only at the cap issue in his comments (as that's that the OP did in the subject). There's a lot more.
Don't get cuaught up only by the 'flashy' issue.
Legendkiller said 'this won't work, and there will be a revolt'. Funny, that describes the poliicies of the last 8-25 years much better - they didn't work, and there's been a revolt.
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