It is very unnerving to see people like Al Frankin -professional clown, and Ron Paul, a certified lunatic, getting traction for amendments to the financial regulation bill. Neither of these guys has a clue what a financial market is, how it functions, nor the critical role of the Fed. Then we see all sorts of other add-ons like debit card fee issues, and other things. Blanche Lincoln is trying to single handedly wreck the corporate derivatives market so she can try to look like she is against us fat cats. This is truly the lunatics now running the asylum. While some parts of the legislation makes sense, and regulatory reform is needed, it is very clear Congress has no idea what really needs to be done and that there is a good chance now that they will end up doing more damage than good.

This is what happens when the president only knows how to extract campaign contributions from the financial community, but then harks back to his community activist mindset. In March of 2009, the top bankers met with Obama and told him he was doing serious damage by bad mouthing Wall St and for a short time he backed off. Now that it is clear his popularity has collapsed and unemployment is not improving materially, he does what he always does, blame everyone else. Carl Levin and Barney Frank then hold made for TV unreality shows, with their band of clowns and the public goes away more misinformed than ever. The media, not really any better informed than Congress, jumps on the band wagon and just reports how Wall St professionals are all crooks and bad guys and then the populist rhetoric is ramped up to a frenzy. Then the real trouble starts when the politicians start to try to pass new laws with absolutely no idea what is really going on. It is all about the sound bite on the evening news and a spot on CNN or Fox.

There is no question we need reform. Unbridled greed and stupidity by residential mortgage brokers, subprime lenders, and issuers of CDO's, which then led to commercial mortgages following the same path, is something that needs reform. However, the right answer is to not reward originators for volume, but for quality. All the incentives were set up wrong, just as they have always been with lenders. Lending officers should be rewarded for fewest delinquencies over 3 years, and not how much volume they closed for the next pool. There should be no reward for creating the next most complex derivative program. I am for a 5% holdback of capital for a securitized pool to become the bonus pool for the originators over a 3 or 5 year period. The whole idea of CDO's to me just invites what happened. They are really just dumping grounds for what cannot otherwise be sold off- they are the ultimate garbage dump of excess junk.