Warren Lays Out Ambitious Agenda For Curbs On The Financial Sector

[Angel Martin]

8. what Warren is proposing is fine

but it doesn't really address the huge systematic risks that remain in the financial sector.

CEO pay is fine but won't reduce systematic risk.

the predatory auto loans are systematic risk. unfortunately the domestic auto cos. have the lowest income customers with the worst credit. the predatory loans are supporting their sales to a significant extent so those loans are going to be hard to stop.

high frequency trading is systematic risk. the financial transactions tax may put a dent in high frequency trading (or just move it to London).

but, the biggest source of systematic risk i see is that there is ten trillion of US dollar denominated debt lent by offshore lenders to offshore borrowers. a lot of those borrowers were in the oil industry so their revenues have collapsed as the oil price has fallen. also, all of those borrowers are in countries where the currency has fallen against the dollar. so dollar denominated debts are harder to pay back.

if there is a financial crisis denominated in dollars, it will hurt the US economy, even if it happens offshore.

needless to say, Warren doesn't have anything right now that strengthens the financial sector against that kind of offshore crisis.

but, i wish Warren would run. she's the only one who seems to understand that there are big risks remaining in the financial sector.