Zuckerman: How to Carefully Fix the Financial System

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weight loss of 12:47PM March 27, 2010

Zuckerman, you're either extremely naive or just another writer being paid off by your Chief Editor to put out another ridiculous article supporting The Fed. I totally agree with Uncle of WA. The Fed has to be whiped out for us to have healthy and stable financial and banking systems. They're a privately-ran institution controlling the nation's money supply and interest rates for their own profit - the institution that our very own government borrows U.S. dollars from at interest. This leads to the overall problem of more debt existing out there than there is money to pay it off --> financial ruin. The U.S. government must end the Fed and start printing and regulating its own interest-free dollar. With The Fed in place, we'll continue to see an increasing gap between the wealthy minority and the vast majority of impoverished citizens, and we'll simply see recessions and financial troubles every 15-20 years.

Chuck of ME 11:13AM December 09, 2009

Zuckerman is a smart man but ultimately he doesn't get it. The Federal Reserve is the heart of the problem and needs to be phased out rather than creating more bubbles, propping up mal-investment and illegally printing money. Do some research Zuckerman and wake up from your Keynesian dream.

Uncle of WA 10:19PM November 27, 2009

Subprime lending was alive, well and in full force well before GWB became prez. I know. I co-owned a mortgage lending firm in 1994 and 20% down, no doc, no income verification were very much in demand.
But Fannie and Freddie weren't making these loans! Private banks like World Savings and First Union were, though they weren't the only ones.

Buzz in WA of WA 10:56AM November 25, 2009

In view of the success it had on policing our economy for the years since its inception why cannot the "great minds in our congress" be smart enough to either reinstate the Glass-Seagill Act or a similar updated piece of legislation? Is it because they are completely owned by the financial world or they do not have the knowledge possessed by the originators of the Glass-Seagill legislation?

David Drysdale of ME 9:19AM November 24, 2009

"And the republican SEC taking the assest-loan ratio to 30-1 from 10-1 that stimulated all the subprime lending. To promote Bush's ownership society. Which led to many losing their homes and an economic collapse."
You are absolutely wrong with your attempt to partisanly blame GWB and republicans.
Subprime lending was alive, well and in full force well before GWB became prez. I know. I co-owned a mortgage lending firm in 1994 and 20% down, no doc, no income verification were very much in demand.

American in Paris 4:23PM November 23, 2009

Actually the subprime debacle that mort blames much on Freddie and Fannie is wrong. They only made 15% of the subprime loans while private banks the other 85%.
And it was a republican congress that refused to regulate fannie and freddie.
And the republican SEC taking the assest-loan ratio to 30-1 from 10-1 that stimulated all the subprime lending. To promote Bush's ownership society. Which led to many losing their homes and an economic collapse.

gene s of FL 3:56PM November 23, 2009

Theoretically, yes.
But lines should be drawn when it comes to any action that involves the tax payer's money such as the AIG bailout and other bank bailout. One thing I just don't get is Geithner's (he was president of Fed Reserve of New York) negotiation with AIG counterparties which we can now call it for what it was - a botched job. This in itself showed why no one in the FED should engage in any action that results to bailing out Wall Street with taxpayer's money.
Sad thing is that he is now our Treasury Secretary and we're getting more of the same raw deals for american taxpayers. He truly needs to go.

American in Paris 3:35PM November 23, 2009

Just a few points:
1. There are inherent conflicts of interest in the current financial system that need to be addressed. For example, banks can charge more interest when they damage their credit worthy customers credit ratings, and they do it. Reporting errors damage consumers, but the banks benefit while being held harmless.
2. What is in the best interest of the lender can be in the worst interest of the borrower. For example, keeping large non-interest bearing balances in a checking account, paying bill earlier than necessary, etc. in order to avoid fees. These increase the risks of being efficient in cash management, and it is controlled completely by bank policy.
3. The complexity of legal documents and the inability to negotiate directly with a banking authority creates a take-it-or-leave-it environment. These put the borrower completely at the mercy of the lender. Relationship banking is dead.
4. High spreads and demanding qualifying standards force entrepreneurs to, in effect, borrow against their own liquid assets. Liquid assets earn low interest, while borrowing is at relatively high interest and puts a larger burden on businesses when expanding. It discourages long-term investment and limits risk tolerance.
5. The current environment makes it difficult to retire. Uncertainty, low interest, difficulty financing, etc. make it impossible for a business to transfer equity and retire. Delaying retirement is delaying the ability for the current generation of college grads to start their careers at a time when the cost of education is off the charts.

Gordon Epstein of CA 2:34PM November 23, 2009

I agree with just about everything Mortimer Zuckerman has to say however, I don't agree with his solution to the global financial challenges we face. Who is holding the Fed accountable and responsible for its misunderstanding of the power shifts in our social and cultural war? We need economic reform, more open and transparent dealmaking, and more understanding and compassion towards the man on the street.

Sandra Stevens-Miller of DE 2:23PM November 23, 2009