As usual, the spectacle was both amusing and frightening. Among other adults who understand financial markets who were at my fitness club in the afternoon, the universal sentiment was something like,
'These clowns barely understand what they are overseeing/regulating, and they've been on this committee for years!'
Of course, between this being an election year, a year with a more slowly-growing economy, and in the wake of the subprime mortgage and fixed income markets debacles, all of the Democratic Senators are attempting to hang all possible blame and responsibility on the administration of the opposing party. The Republican Senators, predictably, ask the respondents helpfully leading questions to elicit explanations that depict and impossible situation which could not be managed ahead of time.
If I were giving awards for this comedy show, without question the award for Most Witless Statements and Questions would go to Jim Bunning of Kentucky. The always-irascible former pitcher thinks he knows much, much more than he does. This time, he castigated the Fed for not knowing all about the brewing subprime lending debacle years in advance.
I'm guessing Jim still doesn't realize that, as Michelle Caruso-Cabrera so ably stated recently, in America, we let innovation work in free markets, until they don't. We don't generally regulate a priori with a heavy hand.
The award for Narrow-minded Agenda and corresponding Witchhunting Questions would go to.... Chuckie Schumer of NY.This perennially partisan Democratic Senator focused with laser-like precision on a sort of 'what did you know and when did you know it?' line of questioning in an attempt to make all of the regulators present look stupid and slow. Of course, it didn't work because Chuck is actually the slow one, showing no grasp of the rapidity with which modern financial markets can move liquid assets away from a financial institution. As Chris Cox explained- many times, due to the Senate panel's stupidity- Bear Stearns lost $10B of its $12B of liquid assets during the Thursday before the weekend during which it effectively ceased to exist independently.
Bob Menendez, the corruption-tinged Democratic Senator from my own state of New Jersey would be the runner-up for witless questions. He embarked on some will o' the wisp search for 'quantitative' measures of the ultimate value of securities the Fed took as collateral for its $29B loan in the matter of the Bear Stearns collapse.
If Menendez had a real grasp of finance, which shouldn't be too much to ask after his years on this committee, he'd understand that the incredible complexity and fluidity of the financial situation surrounding Bear Stearns prohibits firm dollar amounts to be known for various risks and valuation of securities. Unfortunately, asking Bob to actually learn something about the industry overseen by the committe on which he sits is apparently too much.
"Doddering" Chris Dodd, chairman of the committee and Democratic Senator from Connecticut, also postured and blustered about the situation, with little in the way of any insightful questions. Preening from CNBC's Jim Cramer's fawning adoration earlier in the morning, Dodd behaved with that all-too-familiar Senatorial gravitas, as if he and his fellow committee Democrats were the last protective barrier between Americans and their financial assets.
As I noted earlier, the only real message that came through to me from the morning's, and, for that matter, afternoon's questioning of various financial markets regulators and players, was how little grasp of modern financial markets and the plumbing that allows them to function smoothly these Senators have, after so many years allegedly making acquaintance with the sector.
It's really tempting to believe that no Congressional oversight whatsoever wouldn't be much worse than oversight by a collection of preening, pompous, self-aggrandizing fools and idiots.
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