No Fed Centrist Bull here...

From Nouriel Roubini's Blog on December 22, 2007:

"Will U.S. regulators learn their lesson and ban these off balance sheet scams or force them to have the same regulatory framework of on balance sheet assets and liabilities? Don’t be sure of it. After allowing for years the most reckless lending practices in mortgage lending to fester without any control only this week the Fed has come up this week with new regulations that look like band aid and will do little to avoid the same kind of deceptive and predatory lending practices that went on for years; and even these mild regulations mean nothing unless regulators change their attitudes compared to the last six years and decide to put some resources to enforce them.

Expect similar kind of fudge with respect to the SIVs: instead of treating them like on-balance sheet items there will be the same flawed Basel 2 approach of using internal risk models, credit rating agencies ratings and some band aid capital charges for commitments of liquidity lines to provide flawed “principles-based” rather than more effective “rules-based” regulation and supervision of a financial system that has now gone into the beserk law of the jungle when it comes to reckless and unregulated financial innovation"