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Will Wall Street reforms work?

09:20 UK time, Friday, 21 May 2010

The US Senate has approved a bill which will see the most sweeping overhaul of the country's financial regulations since the 1930's. Will the measures work?

The bill creates a new watchdog agency and will seek to reform the complicated derivatives market. It will also increase restraints on larger banks and require proof from borrowers that they can pay back even the most basic of mortgages.

President Obama said the reforms mean that Americans would never again pay "for Wall Street's mistakes".

Will the proposals stabilise the US economy? Is it possible to fully regulate the activities of the financial markets? Do you work in the financial services industry?

This debate has now been closed. Thank you for your comments.


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  • Comment number 1.

    Will it stop Traders sending companies to wall to icrease their own profits?

    Will it stop currency speculators influencing national currencies to the detriment of every single citizen of that country?

    Will it stop Speculators gambling on oil futures and artificially raising the price everybody has to pay by up to 50%

    Will it stop hedge fund managers betting against the futire welfare of entire countries, despite the consequences for those countries?

    Will it stop the markets benefiting a tiny minority at the genuine expense of every single other person in the world?

    I doubt it.

  • Comment number 2.

    The true solutions for incompetent financial planning are conservative lending practices and cost-cutting procedures. The United States Treasury suffers from a great national debt and a low degree of stock market equity. Obama destroyed his administration with wasteful welfare spending to his patrons. The idea of a medicare/medicaid driven health system went out during the 1980s. How is Obama handling an insolvency of the social security system?

  • Comment number 3.

    Yet this is proof that at least the USA unlike free market cassino UK, have learned at least something from the disaster of deregulation. When you consider the collapse of 1929, it was deregulation and speculation that led to that so they put in place a series of mesures, rules and financial regulations to prevent it happening again. But Man NEVER learns. Enter the 80s, Thatcher-Reganomics, then Blair all conspired to remove these sound regulations and the seeds of our economic collapse were sown, leading to the current debt and economic crisis.

    Until we roll back conservatism no matter where it is society and hence people will be exposed to the brualities of the Free market. Its a chilling spectacle but today Osborne and the Tories still talk about 'free markets' and 'degregulation' Cassino Britain still lives on thanks to the brain dead who vote tory. Maybe however other parts of the world are learning where British extremist free market dogma is simply not?

  • Comment number 4.

    If enough flexibility and potential to alter the system is built into the rules during the reconciliation process with the House's version of the bill so derivatives formulas can be gradually altered like medicine to halt a cancer a smooth transition of industry worldwide can theoretically be achieved to things that benefit the common good and save the planet. Specifically raising the cost of carbon to values capable of true recognition of the value of biological systems in place in Nature which have allowed life to evolve and prosper by maintaining balance in all things. I know there are complex formulas which will need limits changed and alterations made in unison in stages without warning but in my opinion it is the world's best hope of change to effectively cast stone upon stone in mid flight to bring about the big changes needed to keep the Earth alive.

  • Comment number 5.

    Agree with post # 01 @ 10:25am on 21 May - 'One'.

    In addition, this whole financial nightmare that has crept up on us all; as individuals and governments/nations via smoke and mirrors, and is still operating on smoke and mirrors.

    So much fraudulent activity with your money via a long, and intended complicated chain?

    The lessons are:

    1) you earn your money - keep it and re-examine how YOU save for retirement? Don't forget - retirement is a journey - not a destination?

    2) if there is too much small print in an 'investment vehicle', then it's obviously not designed to be understood by you, the invester?

    3) Always remember the rich can afford advisement - and often launch funds?

    4) Be more 'creative' with your earnings. By that - if you have an idea to invest in land or bricks and mortar - join with friends and family to create your own company via an independent registered accountant and a registered lawyer?

  • Comment number 6.

    Yet more government jobs that will make no difference whatsoever. It's almost like the UK 3 weeks ago with GB in charge!

    No wonder the Tea Party is doing so well....

  • Comment number 7.

    If the overhaul of the whole US financial sector should have been done much eariler - at the beginning of the financial crisis more than two years ago - now there could be no risk of a next such crisis. It seems that these measures are rather late, but it is better for them to be late than never. The US administration needs to have more determination now in dealing not only with the consequences of the recession, but mainly with the causes of it. And the main cause it was the lack of control of some big banks whose irresponsible management brought about the overall financial disaster. If to compare with what Franklin D. Roosevelt did when tackling the Great Depression in 1930s, Obama did nothing or almost nothing. Roosevelt began to provide fundamental reforms immediately after he had come to power, but Obama wasted the most important time for doing so. To prevent the consequences of the recession two years ago was much easier than to stuggle with them now. And many of the problems that existed at that time, for example, the huge gap between the banking sector and the undustrial sector are yet actual. Given all this, I am rather sceptical about the future and with time the perspectives look more and more dubious because a lot of time was wasted and continues to be wasted. And let us not forget that not only the US financial stability is at stake, but the EU finances are in serious danger as well.

  • Comment number 8.

    Why something opposite is happening in the Stock Market when we are offering a help to Greece who is known for its honesty in handling funds although became a victim to it? Such funds never ever invade the Market anyway to influence it either through mass release of fund to Public or to any Industries but allow correcting the Balance sheet which already taken care of by the various Stock Markets when declaring the profit made by the respective Companies. This is therefore a mare correction in the Balance Sheet to keep intact its purity and value. Instead of showing of a securing of health of us, why we are running away amasses to take shelter under the shed or go underground? This is an enough indication to us to suspect what is governing the Stock Market now. Since we had recovered much from our last shock of recession which was altogether different from earlier recessions, some elements are still taking advantage of fluid Stock Markets.

    Accordingly we must see and ensure that such elements invading the Market are reduced to the minimum as it can never be eliminated altogether. Accordingly we believe that the action of Administration of USA is just and correct to infuse a confidence into it not to doubt a loss of fund to the ones who are investing in it to obtain or secure a return in due course of time with daily monitoring absent.


  • Comment number 9.

    Just another agency set up to administer additional red tape. I'm eager to see who will be the financial czar appointed by the elected community organizer.

  • Comment number 10.

    While it may not stabilize the economy,as the economy depends on several other factors like job creation in the manufacturing and service sectors,it will certainly keep the wall st under lens to avoid the 2008 like scenario from taking place once again.One thing it may be appreciated that the money power of wall st is far ahead in terms having creative fianace guys a step ahead of the not so creative forensic accountants in the administration and the regulatory authorities to check and apply brakes in time.

  • Comment number 11.

    The banks hire the best students to make their traders out of; the regulator does not pay the same. Why will the best take the boring, low paid job when they can get the big pay, bigger bonus, excitement and fancy car in the bank? If they choose the regulator, they are not the brightest!
    Therefore how are the regulator’s second strings meant to keep up with the brightest?
    They can only regulate on something when it exists. Expect the next problems to come from some new financial dealing with a ridiculous name to cover a gamble dressed up in fancy acronyms which even the designers do not understand – but look good.
    By the time the regulator sort out the gibberish the bonus has been paid, the bail out becomes essential, and the average bloke has watched helpless as the politicos flap, the economy nosedives and the job goes again!
    The flapping politicos then blame the regulators!
    Cycle recommences!

  • Comment number 12.

    Greed is still greed.

  • Comment number 13.

    Quote: “The US Senate has passed a bill providing the most sweeping overhaul of financial regulations since the 1930s.”
    The legislation is intended to prevent a repeat of the 2008 crisis, but also reshapes the role of numerous federal agencies and vastly empowers the Federal Reserve in an attempt to predict and contain future debacles. But, didn't the Federal Reserve have control of the process all during the financial debacle; so, how will giving it more powers promote regulation?
    Two Democrats opposed the measure, saying it was still not tough enough. My opinion exactly!
    Dig this: There is a Senate Provision that would force big banks to spin off (like situation comedy spin-offs) some of their most lucrative derivatives business into separate subsidiaries. It’s supposed to create “Financial Stability Oversight Council” to coordinate efforts in identifying risks to the financial system. It establishs new rules on the trading of derivatives and it requires hedge funds and most other private equity companies to register for regulation with the Securities and Exchange Commission.
    President Obama, speaking in the Rose Garden announced victory over the financial industry and “hordes of lobbyists” that he said had tried to kill the legislation, though why any lobbyist would want to kill this particular holey bill is beyond me.
    The most crucial thing that Obama said was: “The recession we’re emerging from was primarily caused by a lack of responsibility and accountability from Wall Street to Washington.”
    Where is the regulation for derivatives, the outlawing of credit default swaps, the stopping of the negative betting against the sovereign debt of other countries, the appropriate language barring banks from proprietary trading (or playing the markets with their own money) — a restriction generally known as the Volcker rule.
    In response to the huge bailouts in 2008, the bill seeks to ensure that troubled banks, no matter how big or complex, can be liquidated at no cost to taxpayers. It would empower regulators to seize failing companies, break them apart and sell off the assets, potentially wiping out shareholders and creditors. Well, this seems like a bad idea to me. Where is the protection for the inoocent investor and possibly his/her 401K?
    The “Financial Stability Oversight Council” will be composed of
    - the Treasury Secretary, Timothy F. Geithner
    - the chairman of the Federal Reserve, Ben S. Bernanke
    - the Controller of the Currency, John C. Dugan
    - the director of the new consumer financial protection bureau,
    - the heads of the Securities and Exchange Commission,
    - the Federal Deposit Insurance Corporation,
    - the director of the Federal Housing Finance Agency and
    - an independent appointee of the president.
    If you look closely, you will notice some of the same-old names and this would be because the same-old group of civil servants and bureaucrats who have been in control all along are still in control.
    Apparently, the bill provides a bunch of rules for the trading of derivatives, the complex instruments at the center of the 2008 crisis.
    With limited exceptions, derivatives would have to be traded on a public exchange and cleared through a third party. Note the absence of the word “independent” third party.
    Among the differences between the House and Senate bills is the inclusion in the House measure of a $150 billion fund, to be financed by a bank levy to help pay for liquidation of failing financial companies. So that taxpayors will never have to be ivolved again. The Senate apparently saw no need for this provision because they took it out. Why?
    The belief is that it could hamper the ability to deal with the collapse of a financial company. Should "hamper" mean absolutely prevent further bail-outs?
    So if you want my opinion, I can think of many uses for this document, but financial regulation or reform is not one of them. The paper upon which the thing is written is more valauble than the content.

  • Comment number 14.

    Over-regulating Wall Street caused the problems so I hardly think that more of the same will improve things.

    Things like forcing banks to lend money to people who cannot afford them and, when they finally wake up and realise it a bad idea then invest in sovereign debt. I mean countries don't default and isn't Greece looking cheap?

  • Comment number 15.

    The reforms will work wonders for the financial institutions' and the country's economic health.

  • Comment number 16.

    The people on Wall Street have taken good care of my money, I know where my money is, how it is invested, and I understand the market forces which drive the value of my investments up and down. If I wanted my money back I could have it in my bank account by tomorrow.
    Government on the other hand has wasted and sqaundered and spent every dime they have ever stolen out of my paycheck. My Tax money gone, My Social Security for my future gone, spent, wasted, the Medicare-Medicaid money healthcare for the old & poor billions lost in fraud and waste. All of this and we are 13 trillion in dept.
    So you consider all this and dare tell me to trust Government more than Wall Street.

  • Comment number 17.

    I wish politicians held themselves to the same standards they are trying to mandate on business. If I ran my personal finances like they run the nation's, I'd be arrested.

  • Comment number 18.

    No idea, the whole world of financial services is based on greed driven by corruption and underhand dealing.

  • Comment number 19.

    No. It will work in the short term only. The fundamental problem is the indiscipline which leads to huge deficits. The problem in the eurozone is different: they have attempted to have fiscal union WITHOUT political union. And that just won't work. Taxes and laws have to converge. In the UK, we may be luckier but we still have to discipline ourselves AND penalise the bankers.

  • Comment number 20.

    How much does a career politician or lawyer understand about the financial markets? This knee-jerk response is merely an attempt to shift the blame away from the absence of governmental oversight.

    Everyone was to blame for the financial meltdown.
    1. Financial leaders threw caution to the wind chasing unrealistic profits.
    2. Government catered to special interests and simply ignored good governance.
    3. Borrowers lined-up for money they knew they could never repay.
    4. Investors allowed themselves to become blinded by high returns. Nobody comlained until the market droped, then pointed fingers.

    We all (globally) had a hand in this. Increasing bank regulation is only part of the solution.

  • Comment number 21.

    Personally I think the idea that money is a useful tool for facilitating trading and enterprise has been demonstrated and should be pretty much where it begins and ends, these other concepts well I don't see why they are needed. If there are other things going on that are demononstrably useful then they should demonstrate them and provided others then verify and verify acceptance via democracy then fine, no problem, deploy other things (there may be a case for better education though so that other people get why things are the way they are). It's slightly beyond me why someone talented in mathematics doesn't use that talent for mathematics in itself or science/technology or something!

  • Comment number 22.

    I saw this book advertised the other day, is it allowed for HYS to post this in case of interest to other people?: Physicists on Wall Street and Other Essays on Science and Society: Reflections in Science, History, and Finance by Jeremy Bernstein! (probably not allowed, shame)

  • Comment number 23.

    Rest assured that there will be more holes in the reforms than a Swiss cheese.

  • Comment number 24.

    This regulation will almost certainly not work. It isn't the bill's content that is wrong, or the desperate need for effective regulation. Rather, what will make this bill fail to be effective is that the politicians have discretion in whether or not they are enforeced, and to grant waivers for the people they extort funds from. Our government is out of control, and before any regulation or legislation can be effective, we need to get them under the control of them people by removing their ability to act with impugnity in deciding which regulations get enforced and for whom. We also need to force upon our legislators and executives the same thing that keeps the courts honest; strict rules to define when a campaign contribution is a conflict of interest that requires them to recuse themselves or go to prison for acting outside of the will of the people and law.
    Until such changes are in place, pretty much nothing is going to be effective, and no trust can be invested in them.

  • Comment number 25.

    They will not work, as apparently the bill does not prevent banks lending to speculators. Moreover, GS's supercomputed trading is basically a money machine and it has to come from somewhere. Us, basically.

  • Comment number 26.

    The rationale of the intended reform is sound. A lot of water has flowed under the London Bridge since the 1930's and outdated institutions seem to have become dysfunctional. This provides ample opportunities for edicious, rent seeking behaviour for which society has to bear a heavy price from time to time. The key issue is should markets run the government or the other way round! Without state props, markets frequently fail.
    At least, President Barack Obama has shown the courage to start the debate for reform. Let us wait for the working of reformed institutional mechanisms before passing any judgement. It is always possible to have a fresh look to improve their efficacy.

  • Comment number 27.

    Why are Countries basing their existence on the shifting sands of the Stock Market, which is clearly driven by only two factors; fear and greed?

  • Comment number 28.

    If this bill is as badly written as the ObamaCare bill, then it will be a disaster.

    We will not know, of course, until it is too late.....just like the real details of the ObamaCare bill were not known until after it passed......and then we found it did NOTHING to protect the citizens, at all, from major increases in costs, and reductions in benefits. All it really did, was make it possible for the government to mandate buying insurance, without making any provisions for those who cannot.

    I expect, again, that the bill will predominantly make the citizen responsible for everything, and make him pay for everything, as well. Little is done, to make things better for the citizen.

  • Comment number 29.

    Pathetic. Only the "government" can "reform" what it caused in the first place. The simple fact remains that the credit crisis was caused by the usual do-gooder liberals who decided that the "disadvantaged" (i.e. those who can't pay for what they "should" have) should become homeowners. Or rather buy a house on no credit with no little or no downpayment. And they insisted that commercial banks provide these loans. The government has absolutely no business dictating to a private bank whom it should lend its customers money to. In the end, banks are owned by its depositors and no one else. That is until the government stuck its clumsy fingers into the pot. And now they are "reforming" the industry. Pathetic.

  • Comment number 30.

    Deregulation caused this economic crisis much in the same way it did in 1929. You run a good home on regulations and rules. I blame the Reganomics and thatcherite approach to financial matters as it stripped away a whole line of regulations designed to keep the market in check because the market contrary to popular vies does NOT serve the interests of the consumer but serves its own self interest. If you want your home to fall apart you open the front door and leave windows open allowing a free for all approach. The free market serves the interests of the Rich whose value to society is doubtful in the first place. Make the markets eat regulation that serves the interest of the consumer and the USA would not be in hock to China by the vast amounts it is already and the UK would not have this collossal debt. We are paying a vast price for these irresponsible free market 'think tanks' that pushed deregulation dogma and ideology. You must and you Can buck the Market else the Market will be allowed to destroy nations then entire continents perhaps civilization as we know it.

  • Comment number 31.

    The US is the greatest advocate of cut-throat capitalism in the world, but it also applies some pretty severe penalties for people who break the rules. Transgressors in the States can do some pretty serious jail time if they are found guilty of defrauding their shareholders or engaging in dodgy practices. The FSA in this country lets the crooks away with practically anything, with a mere slap on the wrist for what appears to be some pretty severe crookery.
    For that reason I think that the reforms will work. The US government and their courts will make sure they do.

  • Comment number 32.

    All to the good. Vested interests detrimental to the National Good called to account. President Obama is not a great President, it is not Rocket Science to see what is wrong but it took someone like Obama to challenge vested interests &, the Americans agree!

  • Comment number 33.

    The financial market runs principally on fear and greed. If left to cycle naturally, these two things balance each other out. When you interfere in the market you alter that delicate balance and everything spirals out of control. The intent of this Financial Reform Bill is to remove risk in some very volatile and complex transactions made by very wealthy and powerful traders or trading organizations. These trades are not for the weak of heart or mind and far beyond the capability of the "average" market participant. Those participating in this kind of financial enterprise well know what the risk is in making the trades they do and they hire well paid and knowledgeable people to handle the transactions for them. When the government butts in and upsets the natural balance of all of this it can only result in big problems that harm rather than help the situation.
    Further, these financial reforms do not include the government run mortgage houses Fanny Mae and Freddie Mac. That is interesting when you consider that the government opening up Fanny and Freddie to government backed sub-prime mortgage loans is what upset the balance [fear/greed] in the U.S. financial market in the first place. Prior to that the private sector was "red lining" or not giving approval for mortgage loans to people who could not afford them and the government told them it was discriminatory and they needed to start making these loans. That removed the fear from the fear/greed combination and that led to disaster. Even today, 70 of all mortgages in the U.S. are handled by Fannie and Freddy and they are still muddling along unrestricted and subject to the whims of U.S. Congress. If you were to shine a bright light on Fannie and Freddy and start going into their well guarded history you would uncover involvement of certain powerful Congressmen who would rather you not know what they've been doing the past few years. Bottom line: This financial reform is a red herring meant to make it look like the private sector is responsible for the economic problems we have today and the government is pure and spotless. Nothing could be further from the truth.

  • Comment number 34.

    it depend on the will of wall street masters to accept the bill.

  • Comment number 35.

    Only in Washington can they not see the utter irony of a goverment that is $3 trillion in debt presuming to "reform" the banking industry.

  • Comment number 36.

    Of course, banks should play by certain rules and borrowers should follow these rules as well without exceptions. Otherwise, none of them could be trusted, and mutual trust is what needed most of all in order to restore the economic growth. Industrial enterprises need loans for their own development, and they have to work together with financial institutions. However, when money are being wasted on loans that can never be returned, this is a crime. There should be done a comprehensive investigation of what happened with the US financial sector, and why it happened. Those bankers who are responsible for creating evil schemes aimed to steal money through fictive enterprises must be brought to justice. Their evil copartners, who are thieves, as well as corrupt officials and clerks who condoned the plundering of the finances deserve the same destiny as well. That is for a start. Trust is impossible without justice. The reforms of the financial sector cannot be done, if the latter is not cleaned from all those criminals who almost ruined it.

  • Comment number 37.

    Financial markets are essentially unstable. Buying causes prices to rise and encourages more buying and inversely selling causes prices to fall and encourages more selling. Either way there is positive feedback. Automatic computer controlled trading has made thing worse.

    Those who can trade on a sufficiently large scale can induce rapid price movements and then make profits by exploiting these movements. Modern hedge funds are really just a variation of the "concert parties" which were banned in the 1930's. This parasitic activity is at the expense of genuine users.

    It is unlikely that the reforms will do much to inhibit these activities. The computer software used by stock exchanges to monitor and control markets needs to become much more sophisticated and should be used to damp down market movements and detect speculative operators, so that they can be penalised and/or banned.

  • Comment number 38.

    The US housing crisis was directly caused by a previous government bill forcing lenders to make home mortgages available to minorities and low income earners. Freddie and Fannie (Government enterprises) then backed these mortgages. When these new home owners could not afford the payments - massive forclosures ensued and now Fannie and Freddie are under water along with many banks - hence the crisis.

    From reading this bill it sounds like proof will be demanded that borrowers can pay for the simplest of mortgages. This is a good thing and hopefully will prevent such practices in the future.

    What I don't like about this bill is the addition of yet another potentially ineffective government agency during a time when the public sector needs to be reduced.

  • Comment number 39.

    Even as we speak lawyers and bean counters are working their way through a maze of loop holes. Nothing must be allowed to interfere with the "Pie in the Sky" Casino where obscene profits are made by trading in imaginary products which are of no earthly benefit to mankind.

  • Comment number 40.

    I think this step , to some extent, will improve the mechanism of u.s economy if we take into consideration the daily regression of job rates and the increasing demand for bail-out aids in some states.
    The bill may work in case president obama facilitates and at the same time tightens the regulations of the mortgage law. similarly , as greece did , u.s needs an austerity plan applied on GNP and for some months untill the overall economy is recovered.

  • Comment number 41.

    Until the federal reserve has the monopoly for dollar production removed,things will not change enough for the Americans to start celebrating their financial freedom.Calling this private bank the federal reserve was a stroke of genius,it allows Americans to presume that its some kind of government treasury.Nothing could be further from the truth,the US government has to borrow vast sums from the fed(at inflated interest rates)the interest on these loans is not even covered by the Income Tax that Americans pay,so America is permanently in debt to a private finance corporation,whose majority shareholders are the Rothschild family whose fortunes measure in the trillions,who live in palaces not houses,and who dictate just about everything by their financial control.

  • Comment number 42.

    What did the market proponents say when this bill is approved? Doesn't it imply that Obama's administration is becoming a 'big government' slow by slow?

  • Comment number 43.

    Reforms put into place to correct thee excesses of an insufficiently regulated bomm-bust period, are good as long as they are in place and seriously enforced.

    The thing is, American history goes through distinct cycles. Any reforms put in place today, will only be argued against and perhaps even repealed at some point in the future elites who are concerned with the chance for quick paper profits at the expense of the public and the stability of the system.

  • Comment number 44.

    There are two key points to focus on in this issue:

    1) Markets are amoral and asocial. They deal with statistics, decimal places, derivatives etc etc. They do not have any ethical considerations or any awareness of social implications. Profit/loss is the only motivation. Therefore the Government has to regulate in attempt to introduce some moral standards for the market.

    2) Anyone who argues that regulation of the financial sector diminishes the freedom of the market is in complete denial. Financial firms are perfectly happy to take public money in bail outs and 'stimulus packages' but they don't like it when the same people who saved them start to say "well we'd quite like to not have to do this again actually so here's some rules"

  • Comment number 45.

    Yes, markets are amoral and asocial; yet, it is the only independent and unbiased instrument of regulating a free economic system. isn't it?

  • Comment number 46.

    …of course it won't work. It's a poorly constructed, hurried, reactionary piece of legislation just like the great financial bailout and the latest U.S. health care bill. I'm sure our representatives jump into these things with the best of intentions, but we must realize that the term "congressional expert" is an oxymoron.

  • Comment number 47.

    If I forge pound notes, it is a criminal offence, but city and wall street dealers can create money without any control, and take a cut for their own personal income. When the inflated system, made from fresh air, collapses, we all have to pay by putting the country's entire productive resources at the disposal of these parasites. Sounds like they can't lose.
    Tinkering with regulations is a waste of time, since the needs of capitalism will always drive them to find ways around regulations. We need state control of all the banking and financial system, so money cannot be forged without democratic control.

  • Comment number 48.

    The United States has $13 trillion in national debt and Bloomberg places national equity at just over $14 trillion. The Obama Admin nearly bankrupted America with massive welfare spending and other give-away programs. Congressional lawyers should consider chapter bankruptcy for the country.

  • Comment number 49.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 50.

    Please consider that American national debt of $13 trillion divided by national equity of about $14 trillion is a debt-equity ratio over 90%. Insolvency is an issue after 80%. The international banking system will require Barack Obama to make federal budget reforms at 100%. If no, then finance sanctions will be placed on the United States.

  • Comment number 51.

    It is the duty of the church and, maybe, some other social institutions, but not the duty of the government to establish moral principles for business. The latter is like a game in which those who are more initiative, more competitive, more clever than others have more right to win. There is nothing criminal or immoral in it if someone makes profits by selling, bying and reselling various commodities, including shares. In this way the capital is able to move where it is more profitable and is more needed. And there is a great difference between the free market and the ruthless plundering of money by various means, for example, through fictive enterprises, or through loans appropriated by bankers themselves or given to their relatives, their proteges and their copartners in criminal schemes. Those loans that were given in such criminal schemes in order never to be paid back were simply stolen, and if this practice continues on a large scale, it can ruin the financial sector completely. First of all, those bankers who are guilty of theft must be brought to justice together with their associates. Then, there need to be established certain regulations equal to all, and with enough transparency in order to prevent any such criminal activity.

  • Comment number 52.

    The regulatory agencies that are in place could have averted the Bush administration 700 billion giveaway to the financial institutions by "doing their job". There are more than enough safeguards in the U.S. system to monitor and admonish institutions that are skirting the rules but the bureaucrats, of either stripe, refused to step in. Given the game of big politics and corporate donations to political campaigns, we can safely deduce the worker bees at the regulatory agencies were instructed to look the other way. These new reforms make for great press but will do little to avert the next giveaway.

  • Comment number 53.

    I don't think there is such thing as 'democratic control'. Control is control and that implies the government's interference in economic matters which neo-liberalists term it 'big governments'.
    To me, I dont think the Wall Street Bill will work as the cost of exercising 'big government' will be too big!

  • Comment number 54.

    What amazes me is how the UK blindly follows the US into war games in Iraq and Afghanistan but when it comes to financial matters travels its own path.

    History shows us that American adventures in foreign policy turn out to be wrong but they are the world leaders in creating wealth.

  • Comment number 55.

    No reforms will be enough until all money is backed by something solid - like gold. Now it is just a paper game, and the players treat it like a game, but the consequences to other people are real.

  • Comment number 56.

    New regulations on the congress are needed more. Before the mortgage crisis, banks were intimided by lawmakers to loan more to people with a poor income to expence ratio. Regulations on the stock market will not stop this. Congreeman Frank went out of his way to berate bankers in his hearings before the crash, on there loaning practices. Now sees wall street as the evil of those practices. New regulations are well and good, as long as the lawmakers are held liable for their parts in the whole mess. Fannie May and Freddie mac are now huge mortgage companies, who are on the bink of folding,because of this. Now taxpayers are on the hook for them too. But hey, lets get the crooks on wall street it will make a good show. mindless soundbites for the masses.

  • Comment number 57.

    Another gov't agency to regulate Wall Street--ARE YOU KIDDING!!

    Gov't agencies are supposed to be regulating mines. They allow mines with more than 50 viloations to continue operating. People died.

    The BP oil spill, the gov't is supposed to be regulating the rigs, drilling and the one which just burned and sank had 11 violations and did the agency shut the rig down? People died. Fishing industries and tourism industries in the Gulf of Mexico bordering states are dying.

    The SEC had all the tools and evidence they needed to shut down Madoff, what were the lawyers employed at the SEC doing, playing video games and watching porn. People last over $60 Billion.

    Obama's healthcare bill will create 159 new go'vt agencies. Count them--159 new agencies! Do you really think healthcare is going to get better? Do you think that 159 agencies are going to talk to each other? Peple will die while waiting for one of the agencies to talk to another.

    Did the FBI, the NSC, the CIA and other intelligenc gathering gov't agencies talk to each other about the data they had (and they did have it!) and prevent 9/11? Over 3,000 people died.

    Is the gov't agency--Homeland Security--keeping illegal people out of this country, shutting our porous borders and throwing people out if this country who don't belong here? Citizens in Arizona and New Mexico don't think so. People are dying.

    So, the biggest contributors to congressmen's reelection funds is Wall Street. Do you think regulators will look the other way and like in all other cases ignore recommendations of congressional investigating committee?

    I gues you know what I think about the new regulations....

  • Comment number 58.

    There are many Master degree and PhD holders in America especially Dr. of economic and Political sciences,but America is suffering unprecedented economic downturns Why? Day by day American is heading to the worst in all fronts.
    Since 2008 Obama including the Masters/Doctorates of economic and political sciences are just voicing for change America but still they don't know the true cause and fact of unprecedented economic downturns except voicing and pointing on G W.Bush and Iraq war.
    What for the American Master and PhD holders, they didn't make any precaution for Nation's economic and politic downturns, also still they didn't try to find out the true cause and fact for that.
    So without finding out the true cause and fact there is no way however sweeping overhaul the country's financial regulations or whatever reforming would be in vain.
    The Master and PhD holders of economic and political sciences are the most responsibility persons for the US economic crisis and politic.

  • Comment number 59.

    Massive greed will continue and will find a way to flourish.The authorities just have to keep closing the doors..they must not blink for s moment

  • Comment number 60.

    The BBC question is premature since this bill, has been passed only by the U.S. Senate. The House of Representatives has its own version which omits some of the key provisions of the Senate bill. If the House passed its bill the two versions must be reconciled and the reconciled version has to be passed in both houses and signed by President Obama in order to become law. The final version may differ considerably from what the Senate has just passed.

  • Comment number 61.

    Reforming capitalism won't sort out its excesses, what's needed is a revolution.

  • Comment number 62.

    One wrote:

    "Will it stop Traders sending companies to wall to icrease their own profits?

    Will it stop currency speculators influencing national currencies to the detriment of every single citizen of that country?" + other rhetorical questions.

    Generally, companies don't go to the wall unless they deserve to, that's the way even imperfect markets work. Long to medium-term profits are the objective of most traders, so it is in their interest to keep sound companies in business. Currency speculation is just another form of trading. Because of political interference with markets, it is generally less profitable than conventional stocks and shares - and much less interesting. The political interference with currencies is usually misplaced and depends largely on national pride and misunderstanding of the implications of a weak or strong currency. In fact, a weak currency can be a temporary advantage to a country with strong exporting industries since it enforces fiscal rigour at home, makes imports more expensive, and exports cheaper - look at China!

    As far as the US measures are concerned, of course they will work. Americans have huge national pride, an enormous home market, huge potential for industrial expansion, a very fluid labour market, and an educated and skilled workforce. Back this with politically accepted rational regulation of financial institutions, and you can't fail. Well done, Mr Obama - and thank you!

  • Comment number 63.

    Will Wall St. reforms work ?

    Not if Wall St. can get around them -- and then plead insanity before the court !

  • Comment number 64.

    I havnt had time to see exactly whats in these reforms - but I know what should be in them. ALL short selling should stopped. It is a totally unnecessary tool - whose only real purpose is to line the pockets of the big traders/smart money at the expense of ordinary retail investors.
    I have been trading shares for over 40 years and have heard all the so called justifications for short trading - maintaining an orderly market, forcing (supposedly) over priced expensive stocks to come down.
    Without short trading the market will ALWAYS find an acceptable balance between a willing buyer and a willing seller.

  • Comment number 65.

    No. Wall street has been revealed for what the extremen left has said long ago. It is a crooked game; top to bottom. It is legalized casino betting done at light speed using computer trading and no money. You don't even have to own the stock you are betting against. It is time to end this 3 card monty scam. The only folks who are not "in" on it are the poor fools who have no control over their 401K retirement funds that are being used for this dice game. The game is fixed for those in power and those who control the roulette wheel. Our currency situation is no better. America is rapidly becoming and going the way of Imperial Rome; down the loo.

  • Comment number 66.

    of course it will not work---it is not stringent enough--and the americans on wall street are a bunch of uncouth and greedy crooks.want to make it work--throw the bums on wall street in a cell and throw away the keys.

  • Comment number 67.

    No - of course it wont work and never will until they close down the Federal Reserve like JFK and Abe Lincoln before him both tried to do. It's becoming more and more obvious to thinking and discerning people who seek alternative news sources other than the smoke and mirrors emanating from the globally controlled mass media, that the former and present Federal Reserve chiefs are also part of the same control system, a conspiracy too monstrous for the average person to contemplate.

  • Comment number 68.

    No, not in the immediate future. The next decade wil see far worse financial crisis than the one we went through recently. I hope the joint effort of EU countries will work out a system of check and balances to lay the ground work of rules to follow.

  • Comment number 69.

    Yet another feather in Prez Obama's hat for the Finance Bill. Obama is dot on his campaign promises. He is bold enough to silence the vested lobbies who are up in arms against his reforms. Bush just wrecked the economy to satiate the fatbags over and above his senseless misadventure in Iraq. The Bill will help a great deal in curbing the reckless millions usurped by the Wall Street. No doubt, it will take time but as they say in China that great journeys start in taking the first step. The dog barks as the caravan passes.

  • Comment number 70.

    War dividend mongers Lovers regulating themselves, what a joke ? Who will enforce this ? The US government Ah Ah Ah What ? this is even funnier ? The US government regulating their utopian base ideologist, it will never happen. It is like asking a pathological theft to stop stealing others because in his/her mind , he truly believes he is just borrowing the goods for the good of the population, the people. What a joke , it would be like an administrator going to his/her boss to say sir/mam you have to laid me off because I don't produce anything , I have no value to the company , I laid off every true value to the company and beside there are no one else to fire except myself. Ha! Ha! Ha! Will wall street reform works ? do chicken have teeth maybe one day when Wall Street cronies get real jobs for a leaving,

    Perhaps US-chicken population like the Thai people will growth some teeth and use them well.

    BBC this is a funny Question ?

    May God bless this New World Order its financial institutions and their agents.

    In only God I trust

    Ex-Gatekeeper of the true lost free world.

  • Comment number 71.

    One of the countries that was terribly hit by the recession was the US. The Americans just don't want to make the same mistake that, by the way, nearly brought its economy to a total collapse.

  • Comment number 72.

    The Rich will always find inventive ways to take from the Poor so reforms will only work until the fatcats find ways round them.

  • Comment number 73.

    The most sweeping overhaul of the U.S. financial regulations since the 1930's,if applied discreetly, will work.The derivatives market became too speculative, and its activities need to be reined in. It is expected that the new watch dog agency created under the new financial regulations will monitor the developments in the Wall Street and work with due diligence to maintain financial discipline all the time.American financial market has, nevertheless, resilience to absorb shocks.But this should not create the complacency that financial crisis will not hit the market again.
    President Obama desrves credit to make the much needed reforms in the financial regulations for the discipline of the financial wizards in the Wall Street so that the Americans do not have to pay the for the mistakes in the Wall Street again.

    Although it is neither possible nor desirable fully to control the financial market,some measures must be taken to disciline the market. After all private property is also regulated property, and as such Americans should shed the habit of resenting regulations in their craze for license. Compliance with the new financial regulations is expected to stabilize the market.

  • Comment number 74.

    Wall Street? A purely parasitical system which generates no wealth but proliferates on that generated by others. It needs to be eliminated.
    Peter D South Carolina

  • Comment number 75.

    These Wall Street fat cat bankers have destroyed the trust of American people and the people of the world. American and the people of the whole world are extremely angry.
    This reform bill may not be perfect but it is a "MUST"

  • Comment number 76.

    A lot of homes were sold to people who cold not afford them. There used to be a lot of abandoned homes in cities owned by "slumlords" who did not develop the property and left cities with areas that suffered from this blight. In Connecticut, the towns started charging these landlord with zoning violations and if they did not fix up the homes to match the standard that was wanted by the townspeople, the homes were condemned and the owner was charged with the demolition, if he or she could not pay, the home was taken by the city, and the town then acquired "open land".

    There are not many homes in the areas I live and visit that have this blight anymore. Most of the people who are "underwater" are in rather large overpriced homes. Entry level and medium priced homes in Connecticut are a hot ticket and Connecticut is seeing a very good real estate market for these homes. The "McMansions" are not selling and there are many of these houses sitting empty. I can only say "HaHaHaHah" about this.

    So, "Will Wall Street reforms work?". probably not, maybe so. The stock market is an illusion for suckers. People who overreact with their money and make poor investments. America's real economy is not in the stock market. That is why America always "bounces" back, as people realize, that everything in reality is the same and the "talking heads" on "Fox News", are just fear mongering idiots. Investing in a home as rental income is a good way to make money, as owning a repair shop for automobiles, and a host of other professions that never show up or are reflected in the stock market. It is amazing to see the :talking heads" spout numbers and gibberish about stock market swings, as if the information they spout is of any use to any one who seriously invests. These investors do not use the television to manage their stocks.

  • Comment number 77.

    We should do same as Chinesse, violators should be executed period, here in US economic situation is lot worst than government like to admit, no to get to much in to the details, mainly thanks to republicans we have more and more people live in desperate conditions, conditions you can see only in third world countries, so we need accountability asap.

  • Comment number 78.

    You can regulate / deregulate a system all you want, you can employ countless people to apply countless rules and fines for non compliance.....but there will always be problems while debt grows.
    It is debt and more debt that makes you vulnerable. The more debt you have the more money moves from you into the arms of those who have most. They thrive best when your debt is greatest.
    Debt, governmental and private is the great enemy. It controls you, forces unwelcome decisions. Limits your horizons. Free markets can do little wide ranging harm if debt is low.
    Every debt incurred by government is a millstone around the necks of the population..... every debt paid is a freedom. Every debt the poor have makes them poorer as they service that debt. Much debt is not profitable, the only good reason for a debtor to incur debt.
    Governments in particular should never be allowed to incur debt beyond a very limited level and for very specific purposes.
    In the UK, the debt levels are still unknowm. PFI debts will last a generation and a half. But PFI debts are only a small part of the total. To whom are we paying these debts ? I have know idea what the debt in the USA is. Worse than ours I suspect. That puts you in hock to others and makes you vulnerable. It changes the way you do business.It forces you to make concessions you otherwise would not.
    When debt is lowered, those who can lend will have to change. Their capital will not have the same power.....
    By just changing the way we view, accept and deal with debt, we could make an enormous change to the way our world is .. because Debt is the great destroyer.

  • Comment number 79.

    Its all just part of a natural progression as the common people have finally caught up with the Financial Shylocks who have been taking them for a ride ever since the first bank was established. Something had to be done and thank God it is. To what end though? Someone has to try and rein in London and Wall St. though I fear the horse has already bolted.

  • Comment number 80.

    shooting vultures might feel good, but it doesn't stop anything dying...

  • Comment number 81.

    I agree with the comment below mine. completely, even through the spelling errors.

  • Comment number 82.

    Can but hope.

  • Comment number 83.

    "At the bottom of the Wealth curve, Men and Women starve and children die young. In the broad middle of the curve all is turmoil and motion: people rising and falling, climbing by talent or luck and falling by alcoholism, tuberculosis and other kinds of unfitness. At the very top sit the elite of the elite, who control wealth and power for a time -- until they are unseated through revolution or upheaval by a new aristocratic class. There is no progress in human history. Democracy is a fraud. Human nature is primitive, emotional, unyielding. The smarter, abler, stronger, and shrewder take the lion's share. The weak starve, lest society become degenerate: One can, compare the social body to the human body, which will promptly perish if prevented from eliminating toxins."

    Vilfredo Pareto 1848 - 1923

  • Comment number 84.


    I fully understand your cynical comments, but the USA is NOT a christain country and the 'christain right' who oppose regulation, who promoted evil free market policies, who are warmongerors and attackers of the poor, are NOT genuine christains.

    Please bear this in mind. The USA and the UK are most certainly the most unchristian societies you can get. If they were christain, they would not allow a free hand for bestial criminal and destructive Wall street and Stock market that serve the interests of themselves, the mega rich and promote policies that endlessly attack the poor and cause nearly 2 billion round the world to live in shocking poverty earning less than a dollar a day.


  • Comment number 85.

    As one president said he who controls the money controls the world.
    Who controls the regulators. take a look on the web for MONOPOLY MAN.

  • Comment number 86.

    This is a typical short term measure which can partially work to limit the damage.
    The long term solution, to be also implemented from now, should be a overhaul of the violent culture that rewards greed. As long as competitivness and the law of the jungle will be the ruling principles of our societies everibody except the saints will be driven to find ways to make more money disregarding the effects on any other subject.
    We need to develop a culture of solidarity, sharing and corresponsibility which will take around two generations but is the only way to tackle the risk (the certainity) of recurring crisis due to excess of greed and lack of humanity in our societies.

  • Comment number 87.

    There are always to get around regulations. As soon as the Republicans get the upper hand in Congress these regulations will be quietly removed.

  • Comment number 88.

    Traders and banks operate in their global playground with a cloak of comic book monster invisibility.

    Trading in consumer products; green energy technology; medical equipment and medicines are global, but increasingly a one way street due to the above attacking so many nations' currencies and causing homeland production unviable?

    People lose jobs when work goes abroad - so they have to buy cheap imports therefore feeding the spiral of decline?

    Buy less imported 'plastic rubbish' or 'stuff' and remind yourself it lifts your mood for about a day? At least buy food in season in your own country and support your own agriculture and farmers.

  • Comment number 89.

    i wish! if it could, it would be a revelution!!

  • Comment number 90.

    All this user's posts have been removed.Why?

  • Comment number 91.

    The US had a strong banking system that dominated the globe until regulations were removed in the 80-90s. Those regulations have not been reinstated. End Story.

  • Comment number 92.

    Am compelled to recommend post #78 @ 07:38am on 22 May - 'Antony Webb' regarding debt? Not only of countries but individual people, families and small start-up business?

    Personally, my understanding and previous employment experience is:

    To obtain fairly priced/legal/affordable credit (debt) you are required to have a good debt (credit) history? In other words, a CV history of borrowing and promptly repaying with 'reputable lenders'? Catch 22?

    Unfortunately, reputable lenders have a minimum lend which may drive some 'innocents' to be drawn into the usual suspects/gangs/money launderers and certain 'front of house' money exchangers today?

    Having worked in a reputable personal/commercial finance arm of a major bank for a year (1970s)- all applications were credit scored; credit vetted and considered on purpose of loan. These loans were unsecured.

    However, credit cards changed everything. Which gave freedom of choice with a 'one-off' agreement with each card. But no regulation of huge interest rate/variable charges? Debt is deadly - when you use your credit card - think 'I am using my debt card - not my credit card'?

    Therefore, this new coalition must work harder to encourage and support a roll-out of credit unions to block out the need for marauding loan sharks who are part of a whole criminal system?

  • Comment number 93.

    The issue is will the regulation of the Banking Industry work? Well the simple answer has to be -that it must!! What has occured in the last year is that Bankers have effectively been paid off for a disasterous set of business policies set off by Sub prime Mortgages. This concept of lending money, accepting default and repackaging debt to be sold on is really why the re-insurance market took off and that was all about the balance of probability of being caught out. However as more people were made unemployed banks wwere not only left with the debt but unsalable assets as well, which made them asset rich but cash poor.

    What emerged out of this debacle was the palabl;e fact that the countries need these banks to such an extent that they had to be baled out by the Taxpayer. Solution- in essence they are state holdings. This is anathema to the capitalist west, however ownership of many of the banks now rests with us-Joe Public.

    My view- well you made your money from us- if you want to leave because it is disadvantageous to remain in the US or the UK then go- but leave your passports on the way out. Any profits must be declared at the borders and taxed at the higher rate. Your profits will not go to benefit to any other country. Your houses will be taken away and your assets will be taxed at the higher rate. Never never again will bankers be allowed to remain unscathed whilst the rest of us pick up the pieces.

  • Comment number 94.

    When Wall St is like a giant GAMBLING CASINO how can regulation help?

    All it does is say to the GAMBLING ADDICTS we THE GOVERNMENT will watch you.

    The very essence of what is wrong with the system is still left to THE GAMBLERS.

  • Comment number 95.

    Like most legislation of its type this Bill has been hastily drawn up as a knee jerk response to a situation that remains little understood. In particular it has not been convenient for legislators to properly identify the actual cause of the financial crisis of late 2008, because it would risk poisoning their relationship with voters, so instead they have legislated randomly against a myth of their own creation. Thus is the price of populist politics.

    The Lex column (probably the world's most respected financial commentator) in yesterday's Financial Times identified three essential flaws in this Bill, which I mostly agree with. Firstly it assumes that greater oversight of a sector that is already scrutinised in minutiae detail will result in better foresight. It won't, as indeed it didn't last time (as always political expedience overcame the ability to spot an unpalatable truth). Secondly it legislates against the innocent: proprietary trading, hedge funds and private equity funds had absolutely nothing to do with the crisis. Mortgage related securities derivatives did not go bad because they were traded off exchange, they did it because house prices dropped (for politicians this is an unpalatable truth and a good example of why they can make lousy legislators). Thirdly it fails to address the real problems which Lex identifies as undercapitalisation of banks, the continued belief that some banks (and other lenders) remain 'too big to fail', market distortions that have been left unchecked, such as government insured deposit capital (convenient that one) and a still too cozy relationship between Washington and Wall St. (which I would personally charachterise as being more pragmatic, albeit not pragmatic enough).

    Lex concludes that whilst this legislation ensures much future paper work and desk shuffling, the next crisis is already germinating undetected somewhere. I would like to add that a look at this weeks other financial and wider news might well offer some sign posts as to where. Markets the world over are tanking because investors are not convinced that Europe, the sick man of the world, is capable of functioning effectively with its domestic problems (for which I blame the eurosceptics, UKIPers and the like, across Europe for holding back and watering down the much needed Lisbon Treaty ten years ago). In Germany another unilateral piece of barmy populist legislation emerged, seeking to prevent the practice of raw speculation on currencies (in other words making an investment based upon one's judgement of the performance of the Government that is allegedly regulating a given economy). This is a bit like switching off your smoke detector or taping the beak of your canary in your coal mine. Why have they wanted to do it? Because they have sought the right to cook the books in private without anyone looking over their shoulder. And with the prospect of the second dip of the recession now looking increasingly likely to happen in the second half of 2010, and with precious little room to protect voters from its true consequences by printing paper, or other debt creation strategies, you can see why. This recession is likely to be much worse than the previous one (the word depression is already being spoken in hushed tones around analytical circles). Here in the UK unemployment reflects the north Atlantic trend and currently sits at about 2.5 million whilst property values, propped up by continued artificially low interest rates and £200 billion of quantitive easing have yet to correct themselves properly from the noughties binge. Yet inflationary pressures remain in evidence. The last time things got really nasty in the UK was when unemployment reached 3 million and the Unions decided to go to war against the Government of the day, which given the public sector cuts we know are coming bodes ill. Even the police chiefs are saying 'don't mess with our budgets because we can see the civil disorder coming and you're going to need us' (our politicians responded by accusing the police chiefs of being political). Add to this a few natural disasters such as the odd volcano and I notice that El Nino has gone ominously quiet this year, hinting at the prospect of a lively tropical storm and hurricane season in the west atlantic (for verification of this visit National Hurricane Centre or just type el nino into your favorite search engine, last time this happened was 2005 which brought us Kartina and Rita, and the second name on this years list is the ominously cute Bonnie).

    Will this new Bill in Washington help? Of course not.

  • Comment number 96.

    "Will Wall Street reforms work?" - Good quality tight regulations work until the market twists the arm of the regulator and they are relaxed and then we go back to boom and bust. Regulators MUST stand firm to bullying by market operators to relax rules.

  • Comment number 97.

    The present World Economic situation is the dying throes of a failed system where the worlds most indebted country is the world economic leader. Any legislation enacted in the USA is at best a stopgap measure in a system doomed to failure. As long as the world economy is tied so tightly to US policy all coubtries are at risk. The present proposed legislation offers no real change but merely attempts to shuffle time frames and responsobilities.

  • Comment number 98.

    Wall Street has become a symbol and generic term (under Hoover) in 1929, as the most powerful and ultimately destructive force in economic history? Sadly, although so much was learned; and many millions died due to this 'market mentality' little has changed in Wall Street?

    Anyone who has any personal (still alive) or educational knowledge will understand why Wall Street collapsed and the ripple effect of it's implosion thereby causing depression in America and globally that ultimately led to the 2nd World War?

    Wall Street failed and collapsed when Germany finally defaulted on it's impossibly high interest loans by all banks and persistent punishment by speculators after the Great War - 1914-1918 war in Europe.

    French greed, pomposity and demand for free coal to ensure their prominence in all their colonies across the world - Africa, Asia etc., etc., from poverty stricken and dying German coal miners sparked a movement of desperation - the extremist right wing and ultimately Nazi Party grew from this exploitation.

    Wall Street in America failed to notice/ignore this while shares rose on debt and loans - not dissimilar to today in Europe and America?

  • Comment number 99.

    Hardly likely. The root problem is greed. That is not going to be controlled by a Committee or any regulatory body. There will be the usual lobbying and pressure groups contriving to influence the members who will be forced to compromise their integrity and good intentions. That is the reality despite all the nice words and sentiments from the White House. They are not worth a row of pins. I am sorry, but that is how it is.

  • Comment number 100.

    Finance capitalism is amoral. It has led to the USA and UK having crippling debts to which the terrorist right seek to blame the poor.




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