Yes, I can see a trend. An unintended consequence has been the decrease of choices in the market place. Have you seen how long it takes for a proposed bank merger or acquistion to make it through the regulatory process? They always make it anyway thereby increasing stock price and decreasing the choices for the consumer. When Bear Stearns failed, there were no hearings about the proposed acquisition by the buyer because time was of the essence. The Fed shoved it down our throats and keep reducing our choices until we will be down to one bank someday.

Since the taxpayers keep bailing out businesses would these now not be socialized programs?

We let people convince us that there was no need for regulations in the first place.

American business, like irresponsible teens: the most they scream that they don't need oversight, the more they really need oversight. We don't let prisoners run prisons.

This is one of the best arguments I've heard for government ownership of enterprises. If government owned airlines and financial institutions, taxpayers wouldn't have to bail them out.

UTOPIA and iProvo are excellent examples of the benefits of government ownership.

Is this supposed to imply some sort of logical imperative? A cause and effect? Deregulated businesses fail, therefore we MUST bail them out? How about letting them suffer the consequences of their miscalculations? What's so bad about that?

Specifically what was deregulated in the banking industry that caused the sub prime lending crisis?

You forgot to mention that deregulation of the oil industry has led to the biggest mass exploitation to ever hit the citizens of the U.S.

The constant cycle of deregulation/bailout seems to me to be a standard conservative republican ploy to enrich the wealthy by robbing money from ordinary people.

The mortgage problems that are now causing havoc with our economy are still being touted and sold by the unscrupulas lenders.

To Question,
I don't know of anything that was specifically "deregulated". But the market for subprime securities was certainly not WELL regulated (if it was really regulated at all) and that has caused many of the problems we are now seeing.

Wow, a bunch of closet Marxists on this list for sure!

First, when an industry loses its regulation (read: govt sanctions and protections) and they promptly go belly up, that means they were junk in the first place. Government actions of deciding who wins or loses is not smart.

Second, the biggest problem is the government bail out. So I go to Vegas, blow my savings, rack up all my credit cards and ruin my daughters college fund - translation; I'm an idiot. Now, well for the children we must have the Government write me a check for X amount to bail me out?

So Bear-stearns makes billions of dollars of poor decisions and now it is our job to bail them out? You people fail the 'duh' test just as much as the Marxists back in DC do.

And iProvo as an example of wise use? Have you followed the issue? Being heavily subsidized it is already getting bailed out by government. Provo City spends millions extra to cover the red on that boon-doggle.

Holy cow. Word to the wise. We won! The Soviet Union and Marxism failed. Stop trying to relive it, both by regulation and bailout!

I'm no closet Marxist, I'm out in the open. The capitalist system exists to reward the obscenely rich and keep the rest of us in cubicles on starvation wages. Schwartz at BearStearns will walk away with tens of millions while the 14,000 workers get nailed. The whole capitalist system is fundamentally unjust and stinks from the head down. (USSR was not Marxist--it was Russian paranoid/oligarchy under a different name.)

Why is it so difficult to understand that "government" is not smoe magical entity. Government is US. When the government pays, bails out, hands out, socializes, "fascistizes", it is us. By example, assuming you have medical insurance, just because your co-pay is only $20, it doesn't mean the cost was only $20. Every government check issued comes from each of us. For you e-bayers, government is just paypal in horrific magnification.

So if nothing was deregulated, what's the point of this entire exercise?

@ BBKing-
You need to do some homework...the Soviet Union was not Marxist, they completely distorted the whole idea of Marxism. Perhpas you're a closet Glenn Bexist?

"Question" is right.

If anything, the securities industry has become *more* regulated in the past decade. Sarbanes-Oxley, in particularly, imposes such a massive regulatory burden that a huge portion of New York's finance business has been lost to London.

The only possible "deregulation" of the securities industry that might possibly apply here would be the repeal of Glass-Steagal not long ago. That regulation used to prevent banks from engaging in other financial services like insurance or investment banking. Unfortunately for the "this is deregulation's fault" argument, it's not the banks that are suffering here. Bear Stearns, for example, was a pure investment bank that never *was* subject to Glass-Steagal.

If anything, overregulation *contributed* to the unfolding debacle. The burden of recently-increased securities regulation drove a lot of investment into hedge funds, which essentially aren't regulated at all. And the increase in deposit insurance (a New Deal legacy) removed a lot of the incentive for lenders to lend prudently, both during the S&L crisis and the present mess.

Also, talk about "bailouts" is imprecise. Bear Stearns isn't getting "bailed out" so much as wiped out. Same thing happened with the S&Ls -- the Resolution Trust Corporation stomped around declaring struggling thrifts insolvent, shutting them down, and seizing and selling off their assets at pennies on the dollar. Their investors and owners lost billions -- in many cases, unnecessarily; if the government had held off with its heavy hand, the thrifts could have survived and saved both their investors and the government tons of money.

The "deregulation" of the airline industry basically meant that the government stopped setting prices. That allowed companies like Southwest and JetBlue to offer discounted air travel, and make it much cheaper. True, it hurt inefficient dinosaurs like Pan Am and TWA, with their top-heavy cost structure -- but the point of government isn't to prop up marginal enterprises. The airline industry was simply oversubscribed due to a corporatist anti-competitive regulatory regime, and everyone who's ever paid a $49 airfare ought to be thankful it's gone.

Ask any neocon capitalist and they'll tell you there's no such thing as corporate welfare. These bailouts must be figments of your imagination.

If I understand it even to a small extent, the Bear Stearns situation had nothing to do with deregulation. It had to do with a reformulation of the rules. What we have now is a tangled mess in the derivatives market that makes it hard to tell who owns what anymmore. So when one bank screws up, it has the potential of bringing down the rest of them, a virtual domino effect. The Fed and the Treasury pulled out all the stops to bail them out to prevent the failure to pull down the rest of the market. That doesn't mean the problem is fixed, not by a long shot. They're all on thin ice now, so Congress is being brought into the issue to see if there's anything they can do to stop the bleeding.

I too will come out of the closet as a Marxist...it has more heart than Friedmanism.

Joe, explain to us, if you can, exactly what taxpayer funds are involved in the Bear Stearns "bailout."

Most "bailouts" are, in fact, figments of ignorant left-wing imaginations.

That said, the proposals being floated by both Democratic candidates right now *are* true bailouts. Fortunately, since neither has any great grasp on how financial markets work, neither proposal has a snowball's chance in Dixie of being enacted, or having any effect if they were.

BTW, Joe, there is absolutely such a thing as corporate welfare. Farm subsidies, for example, are a huge part of it, and ought to be zeroed out. But much of what a typical left-winger calls "corporate welfare" isn't anything of the kind.

GeeBee, the heart is merely a muscle that pumps blood. Use your brain.

Marxism, of course, like the heart, pumped a fair amount of blood itself.

@ Thomas-
Uh, the fact that the government gives any money to anyone could be considered a "bailout", and yes, those are taxpayer funds. Your argument of "left-wing" imaginations belongs on AM radio. Oh, and by the way, I've never seen a tax subsidized farmer retire on a 400 million dollar pension, much like Mr. Raymond Lee of Exxon. There's a vast difference between using subsidies to help feed our country and using them to establish cronyism between the oil companies and the government. Your comparison either underlines your ignorance or your careless, survival-of-the-fittest, capitalist bent.

Thomas, Bear Stearns is too recent. Mark my words, tax payers will foot the bill eventually just as they did with the savings and loan crisis that happened earlier during the Bush administration.

What scares me is that many financial analysts seem like little more than glorified snake oil salesmen. There was some TV financial guru that told his viewers that everything was fine with Bear Stearns a day or two before it imploded. Can you imagine a world where engineers were as careless? You'd have bridges collapsing left and right, microwave ovens frying bystanders, TVs exploding... So what's it take to become a financial analyst anyway - a certificate from a dipoloma mill and a firm handshake?

GeeBee, if Exxon's shareholders are stupid enough to give a CEO an obscene pension, that's their problem. It's their money, not the government's. (Once the government is stupid enough to give an industry a subsidy, the subsidy becomes the property of shareholders, to dispose of as they see fit.)

Re: tax credits for oil-and-gas production, by all means, get rid of those, too! Remember, I'm the libertarian conservative here. Subsidies stink. Incidentally, the oil-industry subsidy was established in the Progressive administration of Woodrow Wilson -- along with the vast majority of corporatist government supports to industry. Knock 'em all down.

Anyway, back to Bear Stearns. *The government isn't giving any money to anyone.* Do you (speaking of "ignorance") even know the details of the deal?

Why is it that every time a so called "Progressive" disagrees with the a Consertative, they automatically go to the "AM Radio" Montra?

I know for a fact that most of you "Progressives" also get your source of information from the "Progressive" Radio and Telivision stations.

So What's with that? Isn't that the pot calling the kettle?

My wife listens constantly to NPR. As I listen I have noticed that they like the "Conservative" stations do not give anyone from an opposing point of view a chance to discuss their side of the issue.

Most of the NPR stuff I have heard, always covers the Democratic party view.

Personally, I hate talk Radio (except about sports). All of them are pompus arrogant pukes.

Joe, I can guarantee there will be shareholder lawsuits galore over Bear Stearns' failures to disclose its problems. I would not be at all surprised if somebody goes to jail. On the other hand, what killed BS was a classic run on the bank. Once the word got out that Bear was in trouble, everybody wanted their money at once, and Bear couldn't accommodate them without selling a huge number of assets. Since the market for a large portion of Bear's assets (mortgage-backed securities and derivatives) is frozen right now, Bear would have had to offer them for pennies on the dollar. It wouldn't have gotten enough for them to pay the people demanding their money, and that would have been that. Bear would have folded Monday morning. It went from weak-but-surviving to dead in about 24 hours.

Agree with you re: the sloppiness of financial advisors, bankers, and brokers.

@ Thomas-
The "details" of alot of the Bush Administration's "deals" are largely a way to simply spin them off. If it looks like a duck and quacks like a duck, guess what it is?

Joe, you're right that the American taxpayer will foot the bill, but not in direct taxes. The Fed, not congress, has been bailing out the banking system (not Bear Stearns) by flooding the market with liquidity. The end result will be increased price inflation (which is a form of hidden taxation) and the further decline of the dollar.

Shareholders have no power whatever over the CEO's "obscene pension." Shareholders can't even nominate directors. They only get to vote yea or nay. It's the old Soviet election process. The small shareholder gets nailed every time. Nardelli ruined HomeDepot and ran off with $210M. McGuire backdated his options and still got away with over a billion. You can bet that Schwartz from Bear Stearns will escape with a nice walletful. This country is a company run by crooks for their own gain.

GeeBee, the Federal Reserve is not part of the Bush Administration, and its funds are not government funds.

"Shareholders can't even nominate directors."

Not true. You just need to own enough shares. How many shares you need to have nominating authority depends on the articles of incorporation.

Again, if you don't want to have the value of your investment reduced by obscene executive compensation, don't invest in a company that pays it. There are plenty of companies that don't -- they just tend to be smaller (and often riskier). It's your money.

Earl knows his stuff. I would add, too, that whatever effect on inflation there might be from the Fed's taking the risk of $30 billion of Bear Stearns' debt onto its balance sheets, are dwarfed by the liquidity floods it's been blasting out since August, with the TAF and its discount and Fed funds rate cuts. For the record, I think the whole effort is misguided -- but obsessing over the Bear Stearns issue is straining at a gnat and swallowing a camel.

You obviously live in an airy world that I have no access to, as a cubicle dweller who is TOLD what I can and can't invest in, whose proxy is useless for nominating directors, and who MIGHT be able to get by on my 401K while opening doors at McDonald's when I'm 80. After 20 years my 401K is still a discouraging pittance. I'm glad people like you are out there riding the camels while the rest of us try to live off the gnats...

I love it!

Only a true Marxist would know that the Soviet Union was not a utopian Marxist state. For them, the devil is in the details and those details get mighty small.

For the rest of the world we see complete socialist/communist failure, inspired by Karl Marx and Joseph Engles. We lump it altogether into one form of junk policy that literally kills tens of millions of people.

The the Marist, they see evil and vile Lenninists, who perverted everything into some watered down, power hundgry grap for the state, over the ideals of Marx and no state.

GeeBee and A Marxist from 9:31 AM, my hat goes off. You are honest enough, and smart enough, to know what you are. Now if you could get the rest of the yahoos to go read a book and admit that they are Marxists as well we could all have a useful discussion.

The average joe is 95% Marxist and not even smart enough to know it. And I assure you, any name calling directed at me, my limited intellect and even smaller brain will be nothing but a compliment. I haven't debated a Marxist since college. She lost then, too.

@ Confused-
In answer to your question-
You neocons have brought the "mantra" upon yourselves. You simply parrot the talking points and phrases that trickle down from the talking-heads, demonizing everything that isn't Christian/gun-toting/heterosexual/capitalist/pro-war/republican. You demonize ideologies that you know nothing about, like socialism, and succeed at only one thing- widening the divide in the United States.

"To Anonymous" (Anonymous is me this time -- forgot to enter my name): A bunch of brokerages have $500 account minimums. ShareBuilder doesn't have one. You probably have more flexibility re: your 401K than you think. That said, yeah, you're unlikely as a small investor to have much clout in nominating directors. So what? Vote with your fingers. If you think the CEO of the companies in your portfolio are overpaid, sell 'em and put your money somwhere else.