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Politics : Formerly About Applied Materials

AMAT 228.58

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To: Katherine Derbyshire who wrote (25003)	10/7/1998 5:10:00 PM
From: BelowTheCrowd	Read Replies (1) of 70976

True, the Fed doesn't have any regulatory authority over Hedge Funds. But the Fed and SEC do have regulatory authority over the banks and brokerages which put significant money at risk in those undocumented, secretive and poorly-accounted for institutions. (What do you think would happen to me if I borrowed money against some collateral, and happened to "forget" to mention that there were already several other loans against the same collateral? I'd be in jail right now, and any loan officer who gave me the money would have been fired for incompetence.) The Fed and SEC's response has been to try to brush the whole thing under the rug, leaving all the players in place. They didn't even try to look at where else this may be happenning, or to take steps to avoid any more occurances. Congress will "hold hearings" and probably do nothing meaningful, after reassuring the public that there's no reason to worry. It's the Japanese attitude: If we act like there's no problem, then there won't be one. We did the same thing with commercial real estate, Latin America, etc. In those cases the US government was able to rescue all participants at huge costs. This time it's global and the US government will probably get caught with its pants down. Unfortunatley the problem is real. None of the regulatory or political bodies are willing to deal with it, and they never have been. But for the names of the institutions and the precise distribution of their responsibilities, the US is looking more and more like Japan. mg

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