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James_Miller comments on Easy wins aren't news - Less Wrong Discussion

39 Post author: PhilGoetz 19 February 2015 07:38PM

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Comment author: James_Miller 19 February 2015 08:29:58PM 5 points [-]

This probably harms some set of investment bankers, so it is most likely not an easy political win.

Comment author: Douglas_Knight 22 February 2015 05:15:00PM 1 point [-]

But investment bankers have no political influence in local politics and very little in state politics, outside of New York and Delaware.

Comment author: James_Miller 22 February 2015 07:35:13PM 1 point [-]

I don't know the specifics, but I would bet that the SEC (and probably other federal agencies) had to approve the auction, and investment bankers have lots of say over what happens with the SEC.

Comment author: Douglas_Knight 22 February 2015 08:02:49PM 1 point [-]

But the SEC did approve the 1997 auction. Maybe it was very difficult for this company to enter the market back then. Maybe it would be very difficult for a new company to enter this market. But that is not the topic. The topic is municipal bonds taking advantage of the options that are available, the options that have already passed regulatory hurdles.

Comment author: PhilGoetz 20 February 2015 01:55:28AM *  1 point [-]

Maybe not, but notice that it also makes it easier for those investment bankers to find more possible investments, maybe evaluate them more accurately, and buy them with less overhead. These are replacing systems where you used to have to be physically present to bid.

I think the result should be a net gain to society, as is generally the case when you make markets more efficient.

Comment author: ChristianKl 20 February 2015 12:09:01PM 2 points [-]

I think the result should be a net gain to society, as is generally the case when you make markets more efficient.

Taking power away from the most powerful actors is often good a net gain for society. That doesn't make it a "easy win".

Matt Taibbi writing about the municipal bond market is worth reading:

Along with virtually every major bank and finance company on Wall Street – not just GE, but J.P. Morgan Chase, Bank of America, UBS, Lehman Brothers, Bear Stearns, Wachovia and more – these three Wall Street wiseguys spent the past decade taking part in a breathtakingly broad scheme to skim billions of dollars from the coffers of cities and small towns across America. The banks achieved this gigantic rip-off by secretly colluding to rig the public bids on municipal bonds, a business worth $3.7 trillion.

Comment author: Douglas_Knight 22 February 2015 05:24:49PM 1 point [-]

That article is not about the municipal bond market. It is certainly not about the interest rate on municipal bonds. It's true that the quote says so, but the rest of the article says not.

Comment author: Luke_A_Somers 20 February 2015 05:52:49PM 1 point [-]

But that collusion becomes impractical and then impossible as the process becomes more and more transparent. This is helping that problem.

Comment author: ChristianKl 20 February 2015 08:39:13PM 1 point [-]

But that collusion becomes impractical and then impossible as the process becomes more and more transparent. This is helping that problem.

Yes, that's why there a lot of money invested in keeping the process intransparent and making it more transparent isn't easy.

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