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Obama agenda: Regulation, fail!

"Regulatory failure, not low interest rates, was responsible for the housing bubble and subsequent financial crisis of the last decade, Ben S. Bernanke, the Federal Reserve chairman, said in a speech on Sunday," the New York Times front-pages. "Mr. Bernanke's remarks, perhaps his strongest language yet assessing the roots of the financial crisis, came as he awaited confirmation for a second term as Fed chairman and as he sought greater regulatory authority from Congress."

More: "The Senate Banking Committee approved Mr. Bernanke's renomination last month. He is expected to be reconfirmed by the full Senate before his current term expires on Jan. 31, despite some vocal opposition." 

An excerpt from Bernanke's speech: "What policy implications should we draw? I noted earlier that the most important source of lower initial monthly payments, which allowed more people to enter the housing market and bid for properties, was not the general level of short-term interest rates, but the increasing use of more exotic types of mortgages and the associated decline of underwriting standards. That conclusion suggests that the best response to the housing bubble would have been regulatory, not monetary. Stronger regulation and supervision aimed at problems with underwriting practices and lenders' risk management would have been a more effective and surgical approach to constraining the housing bubble than a general increase in interest rates. Moreover, regulators, supervisors, and the private sector could have more effectively addressed building risk concentrations and inadequate risk-management practices without necessarily having had to make a judgment about the sustainability of house price increases." 

Here's a worthwhile read: a New Yorker profile of the early tenure of Justice No. 9, Sonia Sotomayor. As expected, she's been a very aggressive justice; out-speaking and out-asking questions of many of her veteran colleagues. 

AP: "The U.S. Secret Service says it is investigating an effigy of President Obama found hanging from a building in the hometown of former President Jimmy Carter." A black doll was hanging over a sign in the town reading, "Home of Jimmy Carter."