Prometheus 6

I want to remind you about The Committee on Capital Markets

Foxes applying for the position of hen house guard
Preemptive class wars (if you only read one of these links, this is the one)
Committee on Capital Markets Regulation wins another one

For those who don't follow links, the information in those posts that is relevant to this one is

• the Committee membership is drawn from that small fraction of old white guys who actually decide what the law will be and how the economy works.
  

  Among the committee members are Samuel A. DiPiazza Jr., chief executive of the accounting firm PricewaterhouseCoopers, and Donald L. Evans, the former commerce secretary who is now chief executive of the Financial Services Forum, a lobbying group for major insurers, banks and investment banks. Mr. Paulson is a former chairman of the group.

  There are also chief executives of DuPont, Office Depot and the CIT Group, and top officers of mutual fund companies, Lehman Brothers and the New York Stock Exchange. William G. Parrett, chief executive of Deloitte Touche Tohmatsu, another major accounting firm, is also a member, as is Ira M. Millstein, a leading corporate lawyer.

• one of the Committee's major goals is to put their activities as far beyond the reach of the law as possible...call it a policy of limiting risk.
  

  Among the issues to be considered are whether laws need to be changed to limit both civil and criminal liability for companies, auditors and directors. One matter Mr. Scott cited is the proper role of state governments in financial market issues, including the cases brought by Eliot Spitzer, the New York State attorney general.

And why am I reminding you of all this? These guys are the real movers and shakers; in one of the linked articles is the statement that, given the identities of the members, the Committee will likely be setting Bushista economic policy for the last two years of his political life. They want our capital markets unencumbered by regulation because the US capital markets, though still dominant, is funding (and therefore harvesting wealth) from a smaller percentage of capital funding deals in the world.

Well, here's what's happened with the freedom they currently have.

Mortgage Losses Echo in Europe and on Wall Street
By VIKAS BAJAJ and MARK LANDLER

Turmoil in the home loan market ricocheted from the United States to Europe and back again yesterday as stocks on Wall Street suffered their biggest one-day decline since February, reflecting growing concerns about tightening credit worldwide.

Big losses on packages of American home loan securities sold to investors turned up unexpectedly in French and Dutch banks yesterday, adding to worries at hedge funds and financial institutions around the globe. With trillions of dollars of securities outstanding, those announcements raised expectations that more problems may soon emerge in other unlikely places as well.

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Asian Markets Fall as Credit Fears Spread
By WAYNE ARNOLD

SINGAPORE, Aug. 10 — Central banks around Asia joined efforts in the United States and Europe to stave off a credit crunch among banks today, as widening fears over losses in the U.S. housing loan market prompted investors to sell assets and commercial banks to reel in credit lines.

Market declines in Europe and New York Thursday sparked a similar rout today in Asia. Stocks in Japan, Hong Kong and Australia dropped by more than 2.5 percent, with South Korea’s benchmark dropping 4.27 percent. As investors sold off assets considered relatively risky, such as Philippine stocks, they bought those considered safer, such as Japanese government bonds. Asian currencies such as the Thai baht also retreated against the U.S. dollar and more liquid and stable currencies such as the Japanese yen.

That worlwide capital market dominance was enabled by...risk management via mortgage backed derivatives.

No wonder they want to limit the liability of management in these cases.

And I would also like you to notice they made this move back in September 2006.