Posted Sep 08, 2009 01:00pm EDT by Aaron Task in Newsmakers, Banking Related: ^DJI, ^GSPC, XLF, SKF, FAS, FAZ, SPY A year after the government put Fannie and Freddie into receivership and nearly a year after Lehman's collapse, there's a lot of talk about what hasn't happened, most notably indictments of major Wall Street CEOs or even just a mea culpa or two. In an interview with Reuters this weekend, Former Lehman Brothers CEO Dick Fuld said he's been "dumped on" and (again) declined to take responsibility for the firm's collapse.
Because of legal reasons, "there's a big gap" between what "a lot of folks are feeling and what they feel they're able to express publicly," says Liz Ann Sonders, chief market strategist at Charles Schwab & Co. "You'd like to think [so], anyway."
Sonders doesn't defend Fuld or other Wall Street CEOs, but says "you need all 10 fingers to point blame in the right direction."
Hindsight being 20-20, we now know securitization was a major reason for the global economic cataclysm, she says. "A toxic problem in [U.S.] housing became global problem because of how far afield the risk was spread."
In this regard, regulators were clearly asleep at the switch and a material overhaul of Wall Street regulation is another thing that hasn't happened yet.
Sonders is "not generally a big fan of tons of regulations after the fact," noting "there's no way to regulate away every possible future error in the system."
Still, she says one thing that hopefully has emerged from this crisis is a shift in focus at the Federal Reserve to an acknowledgement that "asset inflation can be just as toxic as price inflation."
In other words, the Fed will be more proactive in trying to prick bubbles rather than focusing on the post-bubble cleanup, as was the mantra at the Greenspan Fed, when the "cure" for one bubble often led to bigger and more dangerous manias.
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