Saturday, October 23, 2010

Obama Says GOP Will Repeal Financial Reform

And I say "Hoorraaayyyy!!!!"

Politico reports:

In his weekly Saturday address, President Obama warned that if Republicans take control of congress this November, they would repeal consumer protections in the Frank-Dodd financial regulatory reform legislation, which he called “one of the most important victories” he has achieved in office.

“Despite the importance of this law—and despite the terrible economic dislocation caused by the failures in our financial system under the old rules—top Republicans in Congress are now beating the drum to repeal all of these reforms and consumer protections,” Obama said

The bill was designed “to rein in the secret deals and reckless gambling that nearly brought down the financial system,” the president said. “It set new rules so that taxpayers would never again be on the hook for the bailout if a big financial company went under.”

Have you read the bill, Mr. President? Taxpayers will be solidly on the hook for the bailout. Instead of one gigantic, highly visible TARP-like payment, taxpayers will be sucked dry over time with extra fees here, extra tax there, and forced to support the FDIC which is totally broke already.

"Rein in the secret deals and reckless gambling"? My problem here is two-fold. First, "rein in"? So he is saying the bill was designed to control and check "the secret deals and reckless gambling" - meaning they will never stop. Second, who enabled such "deals" and "gambling"? The Federal Reserve and GSEs like Fannie and Freddie. The former with the loose monetary policy, the latter with securitization of mortgages that encouraged loose underwriting standards. Where were the government agencies who were supposed to regulate them? Nowhere. And no one can regulate the Federal Reserve - a consortium or co-op of major banks.

Also, as they say, "Devil's in the details." The bill, even though it was another 1000-pages-plus monster, is not fleshed out with actual detailed rules and regulations. The Treasury Department and the Federal Reserve are going to come up with such rules and regulations over time - i.e. they can write whatever they (or Goldman Sachs or J.P.Morgan Chase, or Blackrock or PIMCO..) want.

But what does his financial "reform" bill do for sure? Empower the Federal Reserve even more so that it can preside over every aspect of the financial lives of ordinary Americans. Even the ex-central bank chief Paul Volcker was amazed (which by the way received scant attention and coverage. He even scrapped the prepared speech to deliver his very strong criticism.).

And what does the bill NOT do? Do anything with Fannie and Freddie, who keep sucking in taxpayers' money like blackholes. Now the final combined bills are estimated to be $259 billion, the worst scenario by the optimistic FHFA, and thanks to the Christmas present by Turbo Tax Timmy last year, the sky's the limit on how much they can continue to lose.

I don't like the lies in the next segment either:
The financial services industry has been wary of more stringent regulation in the Frank-Dodd financial reform bill, which Obama signed in July. And Obama has tapped Harvard Law Professor Elizabeth Warren, who is credited with conceptualizing the Consumer Financial Protection Bureau, to lead its formation in the coming months.

“Reform included the strongest consumer protection in history—to put an end to a lot of hidden fees, deceptive mortgages, and other abusive practices used to tilt the tables against ordinary people in their financial dealings,” Obama said. And the consumer protection bureau “will have just one job: looking out for ordinary consumers in the financial system.”

Citing recent allegations of widespread foreclosure fraud in the still-weak housing market, Obama said the nascent bureau would protect consumers from “unfair practices in mortgage transactions and foreclosures.”

Instead of formally nominating Elizabeth Warren, Obama has made her one of his czars - accountable only to him, no Congressional oversight.

And it is really funny that he mentions foreclosure fraud. His emissaries - Geithner, Axelrod, HUD chief Donovan are outright dismissive, talking it down as minor processing errors and siding solidly with the bankers. According to this administration, forgery and misrepresentation are minor processing errors, if they are done by big banks and their affiliates.

The last bit of the article is equally funny:
He added that Republicans in Congress have promised to make repealing the bill a priority if they become the majority party.

“I think that would be a terrible mistake,” Obama said. “Our economy depends on a financial system in which everyone competes on a level playing field, and everyone is held to the same rules—whether you’re a big bank, a small business owner, or a family looking to buy a house or open a credit card.”

GOP needs 2/3 majority in the Senate to override his veto. Even under the most optimistic estimate, GOP will get about 50% of the Senate seats. Even adding the toss-up seats, it won't be anywhere near 2/3 majority.

"Our economy depends on a financial system in which everyone competes on a level playing field, and everyone is held to the same rules" - hahahahahahahahaha. What "level playing field"? What "same rules"? Did he even try to level the playing field, apply the same rules? (What are the rules? I didn't even know they existed.) The answer is resounding NO.

The rules and regulations have been there all along. No one has bothered to actually enforce them. To solve the problem of not having enforced the rules and regulations, he creates more rules and regulations and foist on the taxpayers the burden of funding the ever-growing federal government bureaucracy to maintain those rules and regulations. I have a feeling that any "enforcement" will be done on the easiest target, which is the taxpayers, the 'small people'.

Just like the health care "reform" bill, no one knows exactly what's in the financial "reform" bill, as the details of these bills are being written by the government agencies (and lobbyists and non-profit foundations and big labor unions and...). And we're supposed to take Obama's word for it, that it is good for us.

This financial "reform" bill - isn't it fitting that the bill's formal name carries two of the most corrupt, in-the-pocket-of-TBTF banks politicians on the Hill? The formal name of the bill which is the law of the land is "Dodd-Frank Wall Street Reform and Consumer Protection Act".

The full title is even funnier: "An Act to promote the financial stability of the United States by improving accountability and transparency in the financial system, to end "too big to fail", to protect the American taxpayer by ending bailouts, to protect consumers from abusive financial services practices, and for other purposes."

And for other purposes. Like what? Funding Afghan war? Subsidizing Government Motors? Paying more to the public union workers (teachers, police, firefighters)? Prepare for anything and everything, as this bill is nothing but evolving, changing document.

OK, that's my rant for the Saturday morning...


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