Sparsely Attended

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SPARSELY ATTENDED….Virtually everyone agrees that one of the root causes of the financial system meltdown has been the vast increase in leverage at big financial firms over the past few years. It’s a problem that’s gotten increased attention since 1998 but one that nobody ever does much about.

In fact, it’s worse than that. As the New York Times reports today, four years ago the SEC voted to change the net capital rule for the biggest investment banks — not to decrease allowable leverage or even to make sure it stayed at statutory levels, but to increase it. Pay attention to the last sentence:

Decisions made at a brief meeting on April 28, 2004, explain why the problems could spin out of control….On that bright spring afternoon, the five members of the Securities and Exchange Commission met in a basement hearing room to consider an urgent plea by the big investment banks. They wanted an exemption for their brokerage units from an old regulation that limited the amount of debt they could take on.

….The proceeding was sparsely attended. None of the major media outlets, including The New York Times, covered it.

This is surprisingly typical of how things get done in Washington. In all sorts of areas, decisions that turn out to have enormous impact are made in sleepy little commission meetings or by executive order, with hearings attended only by a few die-hard lobbyists on both sides and — at least under the Bush administration — the final decision practically foreordained in favor of whatever the business community wants. Then, like a cherry on top of an ice cream sundae, the budget for oversight is either cut or eliminated because the business community insists that market discipline will take care of such things far better than a bunch of federal bureaucrats.

Turns out that doesn’t always work so well.

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Thank you!

We didn't know what to expect when we told you we needed to raise $400,000 before our fiscal year closed on June 30, and we're thrilled to report that our incredible community of readers contributed some $415,000 to help us keep charging as hard as we can during this crazy year.

You just sent an incredible message: that quality journalism doesn't have to answer to advertisers, billionaires, or hedge funds; that newsrooms can eke out an existence thanks primarily to the generosity of its readers. That's so powerful. Especially during what's been called a "media extinction event" when those looking to make a profit from the news pull back, the Mother Jones community steps in.

The months and years ahead won't be easy. Far from it. But there's no one we'd rather face the big challenges with than you, our committed and passionate readers, and our team of fearless reporters who show up every day.

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