The Government Is Contributing to the Panic – WSJ.com:
The solutions being implemented also send the message that resources devoted to risk management are wasted. All of these plans reward the financial institutions that acted like lemmings by chasing the mortgage-related debt bubble rather than rewarding the financial institutions that exercised restraint and risk avoidance and independent thought and action. This unfortunate “heads Wall Street Wins, tails America loses” economic policy is wholly inconsistent with the principles of personal and corporate responsibility that are essential to a functional free market.
Firms like Merrill Lynch that took decisive steps to deal with their problems now look like suckers, as do banks that watched their leverage ratios and paid diligently into a deposit insurance program that offers protection on a far smaller scale than their investment banking rivals are getting for nothing.
If the SEC had done half the job in ferreting out fraud and funny accounting that short-sellers have done, our capital markets would not be imploding. Now short-sellers, like other market participants, are threatened with new restrictions on their activities as Congress begins to hold hearings on the crisis in the capital markets and politicians and regulators turn their focus to the shibboleth of market manipulation.
