Now it's time to play the blame game
Politicians, banks and builders have led us a merry dance and we must not stay quiet, writes Gene Kerrigan
Published 05/10/2008 | 00:00
Two meetings -- one in Washington, the other in Dublin -- both with agendas set by bankers. Look at what happened at those meetings and we'll know a lot about how we got into this banking mess, and what's likely to happen next.
The first meeting was in a basement room at the offices of the US Securities and Exchange Commission in Washington, on April 28, 2004. The heads of the five big US investment banks had long besieged the SEC with demands for the scrapping of what was known as the "net capital" rule.
Under this rule, banks had to keep a cushion of billions of dollars, to guard against losses. Scrap the rule, demanded the banks. Release this money, so we can gloriously expand into the exotic world of "mortgaged backed assets" and "derivatives". Of course, in order to be prudent, only the biggest of the banks, with assets above five billion, should be allowed to take the risk.