Awesome short clip. Runs 2 minutes.
Make sure to read this story from the NY Times on Henry Paulson's role in the SEC rule change (2004) that allowed leverage to expand from 12:1 to 100:1 for only the 5 largest investment banks.
It is the single most important piece to understanding the financial crisis. And it is also the event most ignored by CNBC and the rest of the mainstream news media.
From the New York Times:
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The clip is from last year, the week before Ratigan launched his own show. The guest is Dr. Christina Romer -- a Keynesian academic who advocates stealing from your children to keep Democrats in power.
And guess what, after an hour of research, I can find no leverage limits in the financial reform bill passed by Congress and signed by Obama.
2200 pages of FinReg, and no discernible limits on leverage. Hank would be proud.
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Transcript
RATIGAN: Yeah, I’ll jump in right there and say, uh, Christina, that is fantastic, that is great news, that you’re going to leave risk with those who decide to take the risk in the first place. Can you give me any sense of what the capital requirement will be? In other words, setting a new capital requirement is – sounds great, but again, for a market that was once thought to be highly levered when I borrowed five or six dollars for every dollar that was out there, and even in the peak of the eighties’ takeover boom we were at ten-to-one, we allowed this marketplace to go – in some cases to go forty-, sixty-, even a hundred-to-one in some cases. I’m curious as to what you believe – what your agency believes fair leverage is.
CHRISTINA ROMER: You know, I think the crucial thing is, that is a topic which is going to be worked out, it’s going to be something –
RATIGAN: Well, worked out by who, though? That’s – my concern is, because I know that the financial lobby has exploded over the past couple of months into Washington D.C., and my concern is that the size of that leverage will be set by the same people who set it last time, one of which was Hank Paulson, who was at the time the CEO of Goldman Sachs, and went on to be the Treasury Secretary, and then he went on to be able to have a secret meeting where he gave out, you know, a few hundred billion of the taxpayer’s dollars behind closed doors. I’m curious what the new process of setting leverage will be.
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