Investigate, or Just Complain?

Oh well... Just when it looked like everything was calming down, Andrew Cuomo and the SEC throw everything back into a spin by investigating nearly everyone involved with structured products. This reflects a difference in approach between the UK and the USA, In the UK, we think the weaknesses in the system that caused the credit crunch can be solved by breaking up banks, taxing them until they leave the country and demonizing anyone who’s worked hard in the financial system and been well rewarded for it. In the USA they launch in depth investigations of how trillions of dollars of aromatic pig swill came to be given Aaa ratings. They are introducing stiffer regulations for rating agencies, separating them from the anomaly that their fees are all paid by those they need to be impartial about. They are introducing stricter controls on bank capital requirements, trading activities and selling methods- particularly whether anyone crossed the line in hard selling complicated products to investors. Hopefully, the investors will not be canonized here, but will suffer strict examination on how much due diligence they did before buying all that cra... Stuff... as was their fiduciary responsibility. In my experience "none" will be the answer in many cases, they just blindly looked at rating and spread and piled in. Wonder which approach will work better? Paul Volcker has been in the UK recommending we follow the US program and voicing concern over the (please note this is a quote) "possible disintegration of the euro". Never mind- England won the 20/20 semi final (with a full team of South Africans) and the sun's out... US equities, which had been positive, reacted to the regulatory probes by falling over 1%. The CDX index (which was tighter) ended nearly 3bp wider.. I think one could assume that financials were the worst performers. New issues were quiet and data today includes production and sales numbers in the USA and nothing much in the UK. Finally, one more data note- concerning the debate over whether the recovery is still being fueled by governmental subsidies, programs and loans, rather than being self sustaining.. On Wednesday the first weekly mortgage figures since the US government withdrew their special tax credit for home buyers were announced. New mortgage applications fell nearly 10%- I just mention it. Happy Friday.