In a purely partisan vote, the house approved some serious financial reforms
Bad News:
“The massive plan touches nearly every corner of the financial universe, from the now-opaque and largely unregulated derivatives market to consumer products like credit cards to credit rating agencies to executive compensation. It also creates a new consumer financial watchdog agency.”
“House Financial Services Chairman Barney Frank (D-Mass.), who crafted much of the legislation with the Treasury and shepherded it through the House, described the package as the most significant increase of financial regulation since Franklin Roosevelt’s New Deal.”
This really says a lot.
“To many experts, the real meat of the package is the so-called dissolution authority it would grant federal regulators to put failing massive financial institutions to death without the need of taxpayer bailouts.”
“Under the bill, the fund would collect $150 billion from the largest financial institutions to pay for the cost of winding down one of their own should another crisis strike. Critics charge that taxpayers will still be on the hook since the fund may not cover the cost of another meltdown.”
“The legislation also created a systemic risk council of existing regulators to act as the ranger atop the fire tower, keeping its eye on the entire forest rather than the individual tress as existing prudential regulators do.”
Good News:
“The legislation also included a controversial – but wildly popular among members of Congress – measure from libertarian favorite Ron Paul (R-Texas) to greatly expand the Government Accountability Office’s power to audit the Federal Reserve.”
It still has to pass the Senate. But just goes to show how far the government is trying to reach into the private sector on more levels than just health insurance and healthcare.
Hah, figured the automatic bailout bill would get passed sooner than later. But, then again can we expect anymore from Congress?
Like I previously mentioned before in another post, I had the inauspicious (or fortunate opportunity, depending on how you look at it) opportunity to sit down with Howard Dean for lunch. I suppose he started to get fairly uncomfortable because he blew a gasket or two when I challenged him on a few things.
He was talking to us about the niceties of TARP and the stimulus package, I let him run his pre-set course before I decided to interrupt. I asked him, but doesn’t this all lead to “regime uncertainty” and discourage potential investors from participating? He said “No it actually does the exact opposite, go read up on FDR and what he did”. I then asked him several more questions which agitated him further, but oh well.
I don’t understand their affinity with FDR, but whenever they mention him, run for the hills.
Also, if anyone was wondering, he has no clue what the Austrian school of economics is. Nor does he know who Mises, Hayek, or Rothbard are…
If he did, I’m pretty damn sure he wouldn’t have boasted about the great job Bernanke is doing and how we are on the right course to recovery.
Ughh.. nothing is worse than being tired and frustrated.
Lol, I would’ve liked to be able to listen to that convo. Would have definitely been interesting. And yes, they all do seem to put FDR on a pedestal.
Regime uncertainty is a great term and I was just thinking about that today because that’s what we have now. I literally have no idea what the hell the government will do next and more importantly what the consequences will be. Which makes it very difficult to plan investments and career strategies. I mean it’s like navigating a fog.
Being tired and frustrated has become the norm for me lately. Sigh
So… let me get this straight. The financial institutions that manage to run successfully now have to pay for the ones that don’t. Way to solve that moral hazard, guys.
One small step for liberals, one giant leap for socialism.
Does it snow in Singapore? I’d like to move somewhere there is snow.