The wind of change is blowing. Do you feel it? If you don’t, turn your face to Egypt where the fresh breeze of freedom is sweeping across an ancient land, a land where a proud people have not felt freedom for thirty years. Yes, change is happening there, and the moment is jubilant, but we should all understand this is but the beginning of a long and difficult journey to true self-government. Will the sojourners get to their promised land? We will see, but, for the moment, they are free. The people have spoken, and it is inspiring.
The events in Egypt are dramatic, powerful, and on display for the world. Less obvious, less dramatic, and without the media attention, change is coming here as well. Given the structure of the Dodd-Frank financial reforms Congress passed, the positive change it will bring will come slowly and in bites, but it will come. In my opinion, the reforms are a welcome breeze of change, change that will move our market structure back toward a more rigid and fair structure. Witness the excerpt below.
WASHINGTON (Reuters) – U.S. securities regulators moved to scale back market reliance on credit rating agencies, after the financial crisis laid bare the industry’s shortcomings. The Securities and Exchange Commission voted 5-0 on Wednesday to propose that several of its key documents for securities offerings no longer require ratings references that were designed to help investors gauge the quality of securities.
Personally, I am elated that the new rules have addressed this egregious and long-standing farce in our market structure. I have long railed against the confliction of interests inherent in the rating agency structure so prevalent in the market. The inside players loved their tool, but for those of us on the outside, unaware of its loyalty to those it supposedly rated, that tool worked against us. It helped make an uneven playing field even more so. Like Egypt, though, this initial change is but the beginning of a long slog to clean up the mess left from the storm of greed that just about collapsed our economy, and the global economy as swell.
The SEC’s action on Wednesday is the start of a broader effort mandated by the Dodd-Frank financial reform law to strip ratings references from all federal agencies’ rules, as appropriate.
In time, more positive, structural change will come to our financial system, but it will come in bits. The design of the financial reform is such that it matches the intent of the change in Egypt – transformation without breakdown. First, take down the symbols and then slowly but surely make it fairer for all.
Congratulations to the people of Egypt, and to the military that did not do what tradition demanded; it did not turn on its own people. In fact, it supported the revolt in the role of protector. It kept the peace so Egyptians would be free to express their desires. In my life, I have seen many revolts and corrupt governments fall, but I have yet to see anything like what we witnessed these past weeks. Plant your feet, folks, the winds of change will continue to blow.
Trade in the day – Invest in your life
