Financial Reform Legislation Won’t Prevent Another Crisis

To the Editor:

First off, I am nervous of any financial bill that is referred to as the “Dodd-Frank Bill.” In 2008 these two were completely oblivious when the nation’s largest financial institutions were imploding. I could rip into each of them, but that’s not the point of this letter. The goal of this bill is to avoid another “financial crisis.”

Guess what? If we had this bill back in 2005, we still would have had a financial crisis, and that troubles me. The bill gives more power to the regulators of the financial industry. If my memory serves me correct, the regulators incompetence was a major part of the problem. Here are some examples:

The rating agencies. These agencies stamped AAA ratings on bonds that were in fact junk.

Mr Bernanke. He stated back in 2007 they didn’t expect the subprime market to affect the rest of the economy. Well that didn’t exactly happen.

The SEC. The SEC said they didn’t have the resources to launch an investigation into the Bernie Madoff Ponzi scheme. Unfortunately we later found out some of the most senior officials were watching pornography for up to seven hours a day instead of doing what they are paid to do.

This bill could be a good step to better regulation of the financial industry but if the SEC, rating agencies and other government regulators keep doing a pathetic job (that’s not my opinion, their performance speaks for themselves), the next crisis cannot be averted. Only time will tell.

Daniel M. Patti, CFP

84 South Main Street, Newtown                                     July 21, 2010