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I think the blame for the economic mess we are in goes to both parties. As far back as the Clinton administration Rubin and Summer were pushing for less regulation over the financial markets. Under then HUD Secretary Cuomo the regulations regarding qualifying mortgages for Fannie and Freddie and the FHA were greatly relaxed to included sub-prime and other things which we now regret. The Republicans were no better. Phil Gramm pushed through regulations exempting the electronic trading of off exchange energy derivatives form the review of the CFTC. Even after Enron these transactions were not subject to reporting or review. Under Bush, the light or no touch continued at the SEC and other regulatory agencies. The investment banks were able to lobby the SEC to have credit default swaps deemed not to be insurance and removing any review from state insurance administrators. Unregulated credit default swaps are what brought AIG down.
Bottom line: Wall Street has both parties in their back pocket and we as an electorate need to curb their power. I am all for capitalism and innovation but time and time again we have found that left to their own devices greedy participants will hurt the economy and the average taxpayer gets the bill.
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