Financials A Year Later

Have financials really learned anything since last year? Sure, they have all fired executives, cut bonuses, and promised to be more careful. The government has promised new accounting rules and improved regulation. Has any of this actually done anything to protect investors or even consumers?

Obama has said that the need for stabilization is waning. This shows optimism that banks are getting most toxic assets off their balance sheets, and bad debt has been written off. Now the government wants more regulation. Many are afraid that they will interfere too much. I think regulation is needed, but I do not think it should be about bonuses and running the company. I think it should be more accounting based in that we regulate what they are doing with taxpayers money. Making sure that they are investing in conservative things rather than loans and debt wrapped up in a few different things to disguise the trail.

It seems to me after all this that banks are starting to show their risky side again. After the stress tests, banks found out how much capital they needed to survive another downturn. With the optimism that we are out of the recession, banks are starting to invest their reserves. Investing is not a bad thing, but they have taken it too far. The top 5 banks stood to lose an average of $1 billion a day in the second quarter, according to the WSJ. This is a 75% increase from 2007 and an 18% increase from a year ago. This is a lot of risk to take on given how much they have gone through in the past year. Even CDOs are starting to make a comeback.

What gives them the right to just jump back into the thick of things like this. Should they not be a little more cautious? After all the money we have been made to give them, is this what they are going to do with it? I prefer to invest my own money thank you. You showed us what happens when you get too greedy the first time. It is about to start all over again. Greed never goes away. The government should step up regulation in a way that does not interfere with normal operations. We need to make sure our money is not going to be lost again. Cash money can be made in conservative investments. I'm just trying to make sure mine is going to be used right.