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7/1/2010
Everything you need to know about the financial reform bill

It will take you about 10 minutes. Three differing points of view. Three reliable, credible sources that will save you from reading the 2,319-page “Dodd-Frank” financial reform bill.

First, from John B. Taylor, professor of economics at Stanford and senior fellow at the Hoover Institution, in today’s Wall Street Journal. The Dodd-Frank Financial Fiasco

… instead of trying to make implementation of existing government regulations more effective, the bill vastly increases the power of government in ways that are unrelated to the recent crisis and may even encourage future crises.

…. The problem of "too big to fail" remains, and any cozy relationship between certain large financial institutions and the government that existed before the crisis will continue….

By far the most significant error of omission in the bill is the failure to reform Fannie Mae and Freddie Mac, the government sponsored enterprises that encouraged the origination of risky mortgages in the first place by purchasing them with the support of many in Congress.

Then, from our own Senator Russ Feingold, maverick. Let it be told, this 18-year incumbent is in a pretty serious re-election battle - and he isn’t letting the crisis pass without railing about Wall Street. This maverick (you decide the reason why) is stepping out and won’t agree to become the 60th vote for Sen. Reid to pass this thing in the Senate. Standing Up to the Unholy Alliance Between Washington and Wall Street

I won't support legislation that fails to protect the people of Wisconsin from the pain of another economic disaster. And I don't need to be lectured about this issue by people who supported the repeal of Glass-Steagall, which paved the way for this terrible recession.

It would be a huge mistake to pass a bill that purports to re-regulate the financial industry but is simply too weak to protect people from the recklessness of Wall Street. That would be like building an impressive-looking dam without telling everyone that it has a few leaks in it. False security is no security at all.

And then there’s this detailed list of all that expanded government and regulation – seen as all well and good in the left’s vicious battle against Wall Street. It comes from an organization called Americans for Financial Reform: “For too long, the rules of Wall Street have been written by the bankers themselves. This year, that has to change. Americans for Financial Reform is working …. to protect Americans' neighborhoods, homes and pocketbooks by creating an economy that works for everyone.”

Be that as it may, Chris Bowers does a good job simplifying – and explaining – much of the guts of the bill – a couple of his positions I even agree with! On balance, he is reassured with all this new regulating and these new government boards. On balance, I’m scared to death.

Below is just one sample of how Bowers approaches his analysis. But read the whole thing.

Swipe fees
Visa Inc. and MasterCard Inc., the world's biggest payments networks, set interchange rates and pass that money to card- issuers including Bank of America and JPMorgan. Interchange is the largest component of the fees U.S. merchants pay to accept Visa and MasterCard debit cards. The fees totaled $19.7 billion and averaged 1.63 percent of each sale last year.
We won:

The Federal Reserve will get authority to limit interchange, or "swipe" fees that merchants pay for each debit-card transaction. Retailers can refuse credit cards for purchases under $10 and offer discounts based on the form of payment.

We compromised:

The bill exempt lenders with assets of less than $10 billion, or 99 percent of U.S. banks.

Electronic benefits transfer (EBT) and other prepaid cards are also exempted

So set aside 10 minutes today and read this stuff. Then call Senator Kohl’s office and tell him this “financial reform bill” is a really scary piece of legislation and he best join his fellow Senator in voting against it.

Jo Egelhoff, FoxPolitics.net

COMMENTS

Jo, just what is scary to you?
Please be specific.

Why would finacial reform be scary now and not when Glass-Steagall was repealed?

Dean Weichmann (Thu Jul 01 05:34:03 2010)

What's scary:

Ever-increasing regulation by the feds, which is more likely to quash economic activity than to encourage it

Still more tax and fee dollars mandated to 'regulate' banking and investing

Tying bankers hands concerning decisions to regulate overdraft and other usage charges

Apparently (via both Senator Feingold and the WSJ's Stanford economist), the regulations and incentives (or not) that are in this massive and complex document aren't enough to prevent another Wall Street collapse and potential for hundreds of billions in taxpayer bailouts once again.

Just a start. Am trying to take it all in.

Jo (Thu Jul 01 05:46:45 2010)

Thanks Jo,

I will try to read more.
If so many oppose it I expect it will not pass.

Something needs to be done though.

Something simpler.

Dean Weichmann (Thu Jul 01 07:31:06 2010)

How about the very simple fix of abolishing the Fed, (who will never tell us who they are, nor what they're really up to, and who had it locked in when they started in the early 1900s, that the taxpayers would foot their bill--and who use crises to their advantage).

emily matthews (Thu Jul 01 07:45:15 2010)

The fact that it is not Glass-Steagal !
Is scary !

These guys want to fix what they broke, and then they have the stupidity to not even look at what they have done in creating the problem in the first place.

Rich Carlstedt (Thu Jul 01 08:27:48 2010)

>>> "cozy relationship between certain large financial institutions and the government"

Yes, that's called campaign contributions. Eliminate those and our politicians will do the right thing. Cash bribes got us here and cash bribes will keep us here, unless we eliminate the corruption.

We need "some" regulations, but we must not go too far to stop banks from being banks. Somewhere between zero and 100% control.

Jack Lohman (Thu Jul 01 08:28:02 2010)

I'm with Emily. 100%. Get rid of the Federal Reserve.

Andrew Ellis (Thu Jul 01 08:28:03 2010)

And yea, Andrew and Emily, a lot of smart people agree. But as well, we must control the electronic micro-second trading that has been causing the stock market crashes. I don't have the answers but our politicians should have them.

Jack Lohman (Thu Jul 01 08:34:38 2010)

For those interested here's a left wing view what was won and lost in the banking bill.

Jack Lohman (Thu Jul 01 08:55:51 2010)

One thing I find scariest of all: The bill gives the Secy of Treasury the ability to declare a bank insolvent or potentially so, and distribute its assets to other institutions. What about due process of law? Given especially the brass knuckle approach of this administration, it is not too difficult to imagine that the standards for "friendly" bankers will be different from those who are not. MORE politics injected into matters economic, exactly the wrong course.

and none of this accounts for the fact that EXISTING regulations were not consistently enforced. so how is vastly increasing the number of unenforced regulations going to make things better?

Better an honest money system, no legalized counterfeiting ala the FEderal reserve and fractional reserve banking, so that the value of the dollar can be depended upon, and booms and busts are minimized. It is precisely these mechanisms that have lead to "too big to fail" institutions and the concentration of wealth, and the destruction of our economy.

Ken Van Doren (Thu Jul 01 09:35:23 2010)

To call this bill "scary" is an understatement. The banking industry is already a highly regulated business. This bill adds at least 30 new areas of regulatory buden for bankers to contend with. Thusfar we've not read one thing that would help to protect any consumers or prevent any future financial crisis. The media and congressional leaders have totally misled the country on the ramifications of this bill. To overlook Freddie Mac and Fannie Mae is a scandal.
This is nothing short of a power grab by government and a complete take-over of the banking industry.

Ric Van Sistine (Thu Jul 01 09:50:28 2010)

Only Ken would talk about "Better an honest money system" and totally ignore an honest political system. What is it that the "friendly" bankers have over the unfriendly bankers? CASH BRIBES!

Get used to it, or change the campaign financing system!

Jack Lohman (Thu Jul 01 10:42:56 2010)

In this extremely complicated world, it is far too easy to oversimplify, to look for scapegoats (never ourselves, of course). Those of us who encourage others to borrow, rather than save, are part of the problem and thus, can be part of the solution. This includes those giant, far-away banks..........and the neighborhood credit union.
Unwinding the reach of Federal government intervention in our lives, which some date from the New Deal some 75 - 80 years ago, is like untying the Gordion knot. I don't think it can be done peacefully.
We can each contribute by vowing to borrow less and save more.......for many years.

Tim DuVall (Thu Jul 01 14:09:44 2010)

Tim, well said. We can all do our part. Ric, thanks for the insights from the bunker.

Jo (Thu Jul 01 20:21:54 2010)

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