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Regulating: Not So Easy

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  • Regulating: Not So Easy

    Yes, it's "that" Mr. Buffett.

    QUICK: If you imagine where things will go with Fannie and Freddie, and you think about the regulators, where were the regulators for what was happening, and can something like this be prevented from happening again?

    Mr. BUFFETT: Well, it's really an incredible case study in regulation
    because something called OFHEO was set up in 1992 by Congress, and the sole job of OFHEO was to watch over Fannie and Freddie, someone to watch over them. And they were there to evaluate the soundness and the accounting and all of that. Two companies were all they had to regulate. OFHEO has over 200 employees now. They have a budget now that's $65 million a year, and all they have to do is look at two companies. I mean, you know, I look at more than two companies.

    QUICK: Mm-hmm.

    Mr. BUFFETT: And they sat there, made reports to the Congress, you can get them on the Internet, every year. And, in fact, they reported to Sarbanes and Oxley every year. And they went--wrote 100 page reports, and they said, 'We've looked at these people and their standards are fine and their directors are fine and everything was fine.' And then all of a sudden you had two of the greatest accounting misstatements in history. You had all kinds of management malfeasance, and it all came out. And, of course, the classic thing was that after it all came out, OFHEO wrote a 350--340 page report examining what went wrong, and they blamed the management, they blamed the directors, they blamed the audit committee. They didn't have a word in there about themselves, and they're the ones that 200 people were going to work every day with just two companies to think about. It just shows the problems of regulation.

    QUICK: That sounds like an argument against regulation, though. Is that what you're saying?

    Mr. BUFFETT: It's an argument explaining--it's an argument that managing complex financial institutions where the management wants to deceive you can be very, very difficult.

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  • #2
    Re: Regulating: Not So Easy

    That's awesome. Sure would be interesting to learn who some of the people running Fannie and Freddie were and who their pals in Congress might be...just sayin. Perhaps if one of the main crooks at FM/FM happened to be a big friend of a presidential candidate, we'd hear about that, right?

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    • #3
      Re: Regulating: Not So Easy

      Originally posted by leejo View Post
      That's awesome. Sure would be interesting to learn who some of the people running Fannie and Freddie were and who their pals in Congress might be...just sayin. Perhaps if one of the main crooks at FM/FM happened to be a big friend of a presidential candidate, we'd hear about that, right?
      Sorry, I haven't been keeping up with the news this week, but did it come out that Congressman Frank was indeed in a serious relationship with one of the chief execs of FM?
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      • #4
        Re: Regulating: Not So Easy

        Well, the solution is obvious: We need more regulation! :p
        Dude, seriously, WHAT handkerchief?

        snooggums' density principal: "The more dense a population, the more dense a population."

        Iliana: "You're a great friend but if we're ever chased by zombies I'm tripping you."

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        • #5
          Re: Regulating: Not So Easy

          We need more oversight and transparency. Of Congress!!!

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          • #6
            Re: Regulating: Not So Easy

            Ya Cing, I linked an article about it in one of the other threads, it's just apparently something the media doesn't feel is newsworthy.

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            • #7
              Re: Regulating: Not So Easy

              We need big guns to shoot stupid people! Thin the herd!
              "Sympathy means a lot, coming from Kulmar. I didn't think it was possible.
              Good luck getting rid of your disease. If you're infected, though, stay away--I can't afford to be a zombie right now.
              " Ednos


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