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As it turns out, greed is not good
9 commentsSept. 20, 2008 12:00 AM

There is no doubt in my mind that unfettered, free-market capitalism is the best economic system on this planet. It encourages and rewards entrepreneurship, vision and innovation.

And if only this Eden-like society truly existed, we would all be in paradise. The only problem is that there are too many lying, cheating, greedy crooks in business who are aided and abetted by selfish elected officials.

The Gar-St. Germain Depository Institutions Act of 1982 deregulated the savings and loan industry. Given a free rein, the S&L industry proceeded to destroy itself at taxpayers' expense.
In December 2000, Congress passed the Commodity Futures Modernization Act. It was touted as "protecting the financial institutions from overregulation." It certainly succeeded.

The act even contained a provision totally exempting energy trading from regulation. Remember Enron?

The act allowed "credit default swaps."

These are basically insurance policies covering losses on securities in event of default. The practice was utterly unregulated with no one to determine whether banks or hedge funds had assets to cover the losses they guaranteed.

Shaky mortgages were packaged as securities and sold with default guarantees.

Remember Bear Stearns? Fannie Mae and Freddie Mac? And now Lehman Brothers, Merrill Lynch and American International Group? Eleven closed banks so far, and more than 100 on the Fed's watch list.

In both instances, the deregulation legislation was initiated and passed by Congress during Republican administrations . . . but not without some Democratic help.

Until we have business executives, professionals and elected officials who are honest, trustworthy and satisfied to earn a decent living without engaging in fraud and greedy excesses, we must have laws, regulations and diligent oversight to protect us from ourselves.

What party and which candidates will bring us this protection in November? - Bill Hogan,
azcentral

Fair play!