Obama’s financial “reform:” It’s all about the boodle
In Chicago politics, there’s an old term for the publicly-subsidized pay-offs meted out to the corruptocrats’ friends and special interests: Boodle.
In the age of Obama, “reform” is all about the boodle. So it was with the stimulus. And the massive national service expansion. And the health care bill. And so it is with the financial “reform” bill set for a Senate vote at around 5:30pm Eastern today. In front of the cameras, the Democrats will lambaste the greedy, Wall Street money. Behind the scenes, they’re pocketing Wall Street campaign donations and working out deals.
First, the latest from Capitol Hill:
Senators will face a crucial test vote Monday that could clear the way for debate on far-reaching legislation to overhaul the nation’s financial regulatory system — or end in a partisan standoff — as Wall Street once again takes center stage on Capitol Hill. Elsewhere, lawmakers will be preparing to condemn the alleged sins of Wall Street’s past and also wrestling over how to prevent such excesses in the future. Top executives from Goldman Sachs, beset by charges that the bank misled its clients by selling them mortgage investments secretly designed to fail, will face questions Tuesday about how the firm profited from betting against the U.S. housing market. Senate Republicans said Sunday they plan to block efforts to move forward with an overhaul bill unless Democrats alter central elements of the legislation. Meanwhile, Democrats and Obama administration officials spent much of the day finalizing strict new rules to rein in the huge derivatives trade, including measures that could threaten profits at some of the biggest banks.
Look beyond the superficial characterizations of the bill. There’s a garden of carrots to soften the blow of the sticks.
National Review has a good rundown of all the favors to Wall Street embedded in the legislation, including front-door bailouts, backdoor bailouts, and Big Labor goodies.
You might have heard about the new $50 billion fund that would be used to wind down large financial firms that became insolvent. The fund would come from assessments on Wall Street banks, based on the principle that these “too big to fail” institutions should pre-fund their own bailouts. But you probably didn’t know that these assessments would count as tax-deductible business expenses, meaning that for every dollar the banks would pay into the fund, 35 cents would come out of the Treasury.
This provision is Senate Banking Committee chairman Chris Dodd’s financial-reform bill in a nutshell: a hodge-podge of new restrictions on Wall Street offset by a hearty dose of sweeteners to keep financial-industry cash flowing to Democrats. For every measure that would cut into Wall Street’s profits, another would subsidize its operations. New regulations governing derivatives would cut into the fees investment banks could charge for structuring these customized products. But the bailout authority awarded to the FDIC and the Federal Reserve would allow the banks to borrow at reduced rates, with their creditors secure in the knowledge that the government would step in if the market tanked.
Barack Obama’s Big Lie — that taxpayers are not funding this fund — is refuted by the CBO (via Morning Bell):
Before President Obama continues to go around accusing others of lacking legitimacy, he should read the official cost estimate of the financial regulation bill released by the Congressional Budget Office last Thursday. Assessing the budgetary impact of the $50 billion that “systemically important financial firms” would have to pay in assessments to pay for the bill’s “Orderly Resolution Fund,” the CBO writes:
The total amount collected from assessments is estimated to be about $58 billion through 2020. But such assessments would become an additional business expense for companies required to pay them. Those additional expenses would result in decreases in taxable income somewhere in the economy, which would produce a loss of government revenue from income and payroll taxes that would partially offset the revenue collected from the assessment itself.In other words, these financial firms have to get that $58 billion dollars from somewhere, and that somewhere is you. Now the Obama administration may argue that they actually oppose the creation of the resolution fund. But American taxpayers should be even more frightened when they find out why the Obama administration opposes it. The New York Times reports: “The Obama administration does not support the $50 billion fund, partly out of concern that more money may be needed if one or more big financial firms ever collapse and that creating a fund could make it difficult to authorize more money.”
James Gattuso at Heritage has much more in an analysis of the 14 fatal flaws in the Dodd plan. A few choice morsels:
* Creates a protected class of “too big to fail” firms. Section 113 of the bill establishes a “Financial Stability Oversight Council,” charged with identifying firms that would “pose a threat to the financial security of the United States if they encounter “material financial distress.” These firms would be subject to enhanced regulation. However, such a designation would also signal to the marketplace that these firms are too important to be allowed to fail and, perversely, allow them to take on undue risk. As American Enterprise Institute scholar Peter Wallison wrote, “Designating large non-bank financial companies as too big to fail will be like creating Fannies and Freddies in every area of the economy.”[1]
*Provides for seizure of private property without meaningful judicial review. The bill, in Section 203(b), authorizes the Secretary of the Treasury to order the seizure of any financial firm that he finds is “in danger of default” and whose failure would have “serious adverse effects on financial stability.” This determination is subject to review in the courts only on a “substantial evidence” standard of review, meaning that the seizure must be upheld if the government produces any evidence in favor of its action. This makes reversal extremely difficult.
*Does nothing to address problems at Fannie Mae and Freddie Mac. These two government-sponsored housing giants helped fuel the housing bubble. When it popped, taxpayers—because of an implicit guarantee by the U.S. Treasury—found themselves on the hook for some $125 billion in bailout money. Not only has little of this amount been paid back, but the Treasury Department recently eliminated the cap on how much more Fannie and Freddie can receive. Yet the bill does nothing to resolve the problem or reform these government-run enterprises.
I’m reading a terrific history of Chicago corruption by James Merriner, Grafters and Goo Goos: Corruption and Reform in Chicago, 1833-2003, who writes of the ageless, interdependent relationship between Windy City politicos and “goo goos” (the derisive term for good government reformers). The derision is well-earned. In Chicago, and in Chicago-on-the-Potomac, “reform” has always entailed wealth redistribution under the guise of public service. And it has inevitably led to more corruption. A dominant constant in corruption and “reform,” Merriner concludes, is “the steady expansion of governmental intervention in the economy and everyday life. The problem, corruption in government, always has galvanized reformers to reduce the amount of corruption with stricter laws and regulations. By the now the true remedy might lie in addressing the other side of the equation: reduce the amount of government.”
Or as I put it in Culture of Corruption: As government grows, corruption flows.
Along with an ocean of boodle.
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I heard a dem this a.m. say that there were a few things not in this reform bill, but they will get them in the next one! So, this won’t be the only bill. Yikes! Republicans, DO NOT VOTE YES ON THIS BILL!! I fear that a few are going to cave.
Regarding Chicago, I also heard that they are reqesting some National Guard troops to help with all the violence that is sweeping the city. They have always had violence, but apparently it is even worse. Hmmmm….corruption, graft and violence. Kinda the usual trifecta, don’t you think?
Absolutely reduce the amount of “government”. There is no other answer to the sick nexus of government and large corporations that is seeking to take over our country.
Ford posted profits the first quarter. Remember Ford? The one that didn’t take the bailout?
That’s right. The money comes from a magical place where pink unicorns fart cotton candy.
I heard this a.m. that GM has an ad out claiming they have paid back the TARP money…all of it. It is a lie. They took money from one pot of TARP and used it to pay part of the loan. A shell game. They are now being investigated for false advertising. But since the government owns GM, nothing will come of it.
WOW, it’s surprising the lame stream media can’t see the corruption … they did a reasonable job meting out the Republican non-existent sex scams …
I wonder what could be their problem.
No surprises here -
But think of all the jobs this bill will create for porn-surfing “regulators” at more useless government agencies.
This bill will be a significant boon to the porn industry!
I know – so much for truth in advertising!
Progressivism is blinding their senses. They refuse to see. They have been brainwashed and cannot comprehend the truth. This is what is happening today. “They deceive themselves and the truth is not in them”. Trying to make them recognize that is almost impossible. This isn’t going to end well.
I just emailed one of my RINO Senators, with very clear & pointed instructions not to embarrass himself & his Conservative Republican constituents by voting FOR the “Financial Reform” bill. We’ll see, he’s not up for reelection in November, but the other RINO Clown is.
When the time comes…
there will be nowhere for them to hide.
I do believe many tens of millions of us have known and hoped for this for a generation or more-taking a broad ax and chain saw to government power, taxes and spending. The same tens of millions of us know it will not happen as long as current conditions continue-too many other tens of millions have learned they can vote themselves onto the various government rolls and benefits the guy behind the tree has to pay for. Be it the welfare dependent in the slums, huge banks or billion dollar agri-business and others they all have a vested interest in sucking the life out of this country.
But we are close-very close to a financial melt down no Liberal,no Conservative, no honest man nor grifter can avoid. Millions of baby boomers are nearing retirement and companies would rather dump them than younger workers. Neither Social Security nor private pensions can facilitate the numbers. Government, commercial and private debt has reached levels that can not and will not be sustained. Government can raise taxes and/or float inflation but with current levels that will not help-no more than the Weimar Republic’s efforts could save them.
What happens then I do not know but this seems more 1933 than 1776. But I have promised myself to at least try to not go quietly into the night.
And while what ever President we have then will appoint a Blue Ribbon Commission others will be dreaming of a New American Gulag run by a New American State Security Services. The Day of Reckoning will be upon us. Every last American will have a clear choice in their Rules for Radicals; Saul Alinsky or Thomas Paine-tens of millions will choose the comforting chains of fascism and tens of millions of us will not.
Work, hope and pray for reform; this is good. Keep your powder dry.
The Road To Serfdom (updated):
1). Government causes problem.
2). Government uses the problem it caused as a pretext for amassing more power (thus causing new problems for it to “solve”, and more promises to “solve” it).
3). Public continues to obessess on Jon Stewart, The Today Show, and Dancing With the Stars.
4). Country goes down drain.
The formula is inviolable (works every time).
This is why Fannie/Freddie are not addressed at all in this bill, and why they will never be addressed in any meaningful way under this regime.
Given the history of this administration and Congress, there’s no doubt this would/will be another giant club to hit anybody who dares contribute to Republicans or fails to kick in to the Democrats.
DISTRICT OF CORRUPTION.
Nuff said.
Every day presents another ‘slap forehead you can’t make this crapola up’ moment. If this admin. were trying to write and hawk a cheap novel with these kinds stories no one would buy it…oh wait. There’s two I can think of right off the bat. More aspirin.
Would this bill hold Standard and Poor’s and Moody’s responsible for giving AAA ratings to junk derivatives? Not that I can tell.
On April 26th, 2010 at 10:49 am, happyscrapper said:
I heard this a.m. that GM has an ad out claiming they have paid back the TARP money…all of it. It is a lie. They took money from one pot of TARP and used it to pay part of the loan. A shell game. They are now being investigated for false advertising. But since the government owns GM, nothing will come of it.
***
George Orwell was 26 years ahead of his time when he picked 1984 for his excellent novel about authoritarian government and disinformation. It’s here bigtime now. Just call the Left Wing Media the Ministry of Information.
***
Vote these corrupt clowns out of office in the 2010 and 2012 elections. FUNEMPLOYMENT for them sounds pretty good to me. Start with Dodd, Frank, etc. And put the frosting on the cake by showing Comrade Obama (PBUH) the door.
***
John Bibb
***
Get them out of Washington and send them back home where they can get a green job. Vote 2010.
Just not MY home please, please?
I’ve seen this bill before. I believe it was called the “anti-dog-eat-dog rule”. Chris Dodd=James Taggart.
Lenin is proved correct. The crooked bankers are dealing with the devil for their own short term gain. These bargains will kill us all and usher in irrevokeable communist rule with Wall Street assuming they can escape the Vandal hoardes. Scumbag traitors.
Triple A it all they want. Prudent investors will steer clear of this poison.
The bad news is, the prudent investors will once again be forced to bail out the imprudent.
Ignorance of the risk is no excuse.
Or something like that.
Hopefully the republicans have realized that they can not vote yes on any of these Obama initiatives. None of them.
They need to filibuster everything the Dems put up for a vote. Shut them down until they’re voted out. Because nothing the Dems propose is good for America. It’s only purpose is buying Dem votes.
Time to actually be the Party of No when it comes to ANYTHING the Dems want.
*All the more reason to toss the whole kit and kaboodle out of D.C. in 2010 and 2012; If the GOP lays over on this one, which does nothing to address the root cause problems(Fannie,Freddie,CRA), then a new conservative party must emerge after this November; These next 6 months may be the last for the GOP if they don’t do right by the majority center-right folks of this country; We are paying attention GOP, and we already know the Democrats are the “Death to America” Party, so are you going to join them or fight for us?
State and Local Democrats need to feel the heat too, since they all work together!
Dismantle the Democrat Party! Vote them all out of office in 2010!
Which, henceforth, shall always be known as Oboodle.
This is the only statement needed to see this is not any kind of reform at all.
Creating a bunch of Fannies and Freddies? Absolutely. A big part of the crash was so many banks getting on the sub-prime gravy train. Nothing will stop the “too-big-to-fail” Democrat donor sources from feeling even more free to do the same thing if this crap is passed.
Just as one bank did not sit by while their competition jumped into sub-primes, so will these crooks jump into the next mess….firmly with the knowledge they will never be held accountable as long as they donate to the right people.
Add to this analysis, Glenn Beck’s dismantling today of the CCX (Al Gore’s Chicago Carbon Credit Exchange scam) connection with Goldman Sachs. It is simply inexcusable that the media ignores utterly compromised the administration is with Goldman Sachs and Al Gore cronies, who stand to become billionaires with their own personal investments while they pull the government levers as government officials on behalf of their corrupt clients.
How can this be allowed in America? The scam is estimated to be worth ten trillion dollars!
It’s not that this administration is not transparent, it’s that the media refuses to report what is in plain view!
kind of off topic…barry’s job LESS tour…lol
http://www.youtube.com/watch?v=kWyS5xx5pYE&feature=player_embedded
If the Financial Reform legislation passes and is signed into law, the Congress, who is suppose to answer to their constituients (That’s US!), will be one step closer to becoming “OBSOLETE”!
The Treasury, the POTUSA and his Advisers will pick and choose who receives YOUR tax-funded “bail-out” funds – NOT your Congressional Senator and House Reps!
Sounds more and more like another step toward a COMPLETE Power-Grab by the POTUSA Adm!
Call you congressional leaders and ask them if they are “out of their minds”? jb
Pass this one around and pick it apart!!
Link to the bill:
http://banking.senate.gov/public/_files/ChairmansMark31510AYO10306_xmlFinancialReformLegislationBill.pdf