Friday, November 13, 2009

Rick Santelli is right (again)

Rick Santelli, CNBC
This morning I watched CNBC's Rick Santelli talking from the Chicago Board Of Trade.  His so-called, "Santelli Rant" has been watched on YouTube over a million times and his sentiments today, once again, represent the views of many Americans who pay their own way, just like you and me.  We believe in living within our means -- it's how we were raised -- but we lack a microphone.

Rick Santelli was in fine form this morning while debating Steve Liesman.  The topic was banking reform and Mr. Santelli made a case for an elegantly simple cure -- raise the banks' capital requirements. 

Another CNBC commentator chimed in that this is the same risk premium banks require when a homeowner has a marginal credit history -- the bank looks for more cash in the deal -- a bigger down payment to compensate for the risk of default.

Why can't we use the same mechanism to minimize chances of another banking meltdown?  Do we need new federal agencies, reams of new regulations, congressional hearings, Barney Frank class warfare speeches and on and on? 

Banks just need greater reserves to cover their own risk-taking.  I realize such requirements affect profitability, but it beats more government involvement.