I’m the corruptocrat more responsible for creating the banking meltdown conditions. No, I am!
As you all know, the Senate passed the Dodd-Frank financial “reform” sham last week (see my post on the GOP-enabled vote here). Today, President Obama will sign the 2,319-page monstrosity into law.
The Associated Press calls it “sweeping.”
My adjectives are different.
In choosing to ignore the actual causes of the financial crisis — loose monetary policy, Fannie/Freddie, and never-ending efforts to expand homeownership — and instead further expanding government guarantees behind financial risk-taking, Congress is eliminating whatever market discipline might have been left in the banking industry. But we shouldn’t be surprised, since this administration and Congress have consistently chosen to ignore the real problems facing our country — unemployment, perverse government incentives for risk-taking, massive fiscal imbalances — and instead pursued an agenda of rewarding special interests and expanding government.
At least we’ll know what to call the next crisis: the Dodd-Frank Crash.
Buried deep in the bowels of the massive financial-regulation bill the Senate passed Thursday are massive race- and gender-employment provisions that will cost countless millions to enforce and appear to duplicate other civil-rights initiatives already in place.
…Diana Furchtgott-Roth, a senior fellow at the Hudson Institute who served as chief of staff for former President George W. Bush’s Council of Economic Advisers, tells Newsmax that the rules represent a “dramatic change in employment legislation.”
Four members of the U.S. Commission on Civil Rights recently penned a letter to Vice President Joe Biden, Majority Leader Harry Reid, and several other leading senators, objecting to the new fair-employment regime in the Dodd-Frank legislation now headed to the president’s desk.
“The likelihood that it will in fact promote discrimination is overwhelming,” the letter states.
Those who argue that more regulation and punishment are needed now have been appeased. But does regulation work? Let’s remember that:
• The SEC was specifically created in 1933 to uncover frauds such as the one Madoff perpetrated — but that it failed woefully to do its job.
• The Comptroller of the Currency, the FDIC and other bank regulators, both federal and state, were supposed to regularly investigate and uncover activities such as the banks’ off-balance trading funds, which provided the funding that did much to encourage the speculative mortgage frenzy.
• The Federal Trade Commission had jurisdiction over consumer loans, including the home-equity loans and zero-down-payment mortgage loans that entrapped consumers.
• The Federal Reserve was supposed to preserve a sound currency, even as chairman Alan Greenspan was publicly encouraging people to take out adjustable-rate mortgages.
Fully 80% of those surveyed by Bloomberg say they have little or no confidence the bill will prevent or even soften a future financial crisis. Nor will the bill be a big win for the economy. If anything, it will hinder the recovery and weaken the financial system.
Indeed, despite all the hype from the president and his minions…most knowledgeable observers agree that the new law will not prevent another financial crisis. No reasonable person should expect that it should. By its very nature, the financial system relies on leverage and investor confidence. As the experience of 2008 shows, that can be an unpredictable and volatile mix. So no matter how many times President Obama says otherwise, the new law won’t ban financial doomsdays. As his own FDIC chairman, Sheila Bair, says, “No set of laws, no matter how enlightening, can forestall the emergence of a new financial crisis down the road.”
Sheila needs to have a chat with the president. He seems to be one of the only ones who’s under the illusion that the bill is some sort of cure-all. “Because of this bill,” he intoned just last week, “the American people will never again be asked to foot the bill for Wall Street’s mistakes.”
Actually, that’s already wrong. Taxpayers are still on the hook for the bad mortgages guaranteed and owned by the two entities (and key causes of the crisis) the new law studiously ignores: Fannie Mae and Freddie Mac. Their ultimate losses figure to be much, much higher than any bailouts provided to date.
Farcical. Reckless. Cosmetic. Costly.
I better stop now before the adjectives turn into profanities. The idea of Barney Corrupt & Chris Countrywide Corrupter beaming on stage with the Chicago thug-in-chief as they all at themselves on the back for squandering our money and increasing their power is too much to bear this early in the morning.
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