Thursday, June 18, 2009

Dems Want Financial Overhaul By Year End

A hasty trade in a panic situation often ends badly. Last year's bank bailout bill could be considered as such an example, at least for taxpayers. But a hasty trade without a panic situation smells strange and contrived. Why the hurry? More importantly, why the trade to begin with?

Democrats to push through banking overhaul quickly
(6/18/09 AP via myway)

"Democratic leaders have committed to enacting by the end of the year the biggest regulatory revision to the U.S. financial system since the 1930s - an undertaking so ambitious it has some lawmakers worried about missteps.

""We have to evaluate it, weigh it, slow it down and make sure we do it right," said Sen. Richard Shelby of Alabama, the top Republican on the Senate Banking Committee. "Because if we don't, we will pay dearly.""

Oh no kidding, Mr. Shelby. But alas, what could Republicans do? They are outnumbered. Besides, despite overwhelming popular sentiment against it, both Republicans and Democrats voted for the bank bailout plan last year. The stock market crashed right after the passage. I remember Senator Shelby voted no. Thank you Senator for your effort.

What I absolutely do not like about this proposal is this:

"Obama wants to empower the Federal Reserve to oversee the largest and most influential financial firms. He also wants to create a council of federal regulators, chaired by the treasury secretary, to monitor risk across the broader market."

The Federal Reserve, a private entity, and Treasury, both of whom many people have said significantly contributed to the financial crisis if not actually caused it, to "regulate" financial institutions and markets. You could say it takes thieves to catch thieves, and that's the best I can say about it.

The Fed banks are not even listed under the U.S. Government section of the phone book. And we are going to give them more power. Right.

""We regard this as very pro-market," said Rep. Barney Frank, D-Mass., who chairs the House Financial Services Committee. "Unless you have investors that are well-protected, you don't have a market.""

If this is not a newspeak, I don't know what is: Stifling regulation from a gigantic bureaucracy is pro-market. Oh, actually I do know. This headline from Bloomberg 2 days ago:

Obama Says ‘Robust’ Growth Will Prevent Tax Increases

Mr. President, it's the other way round: Tax Increase Will Prevent Robust Growth.

In a span of just a few days, we have had

  • Proposal for sweeping major overhaul of the entire domestic and international financial systems that we cannot wait any longer
  • Proposal for sweeping major overhaul of health care system that we cannot wait any longer
  • Most dire warning on climate change urging us to do something very quickly or else
So the "shock and awe" Obama version continues. As long as the opponents are in reactive mode, e.g. Senator Shelby "We have to evaluate it, weigh it, slow it down and make sure we do it right", I am afraid many of such proposals will go through to the great detriment to those who will be forced to foot the bill.

Does anyone remember We Are Out Of Money? Even the president said that not so long ago.


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