SeriousBull

Reform to say we did something…

Tags: Barney Frank + Deficit + Economy + Federal Reserve + financial reform + Geithner + Ginnie Mae + Treasury

The House and Senate versions of the financial reform legislation is in the reconciliation process to merge the two bills into one. The Fed and their lobbyists have already won no matter what the final version becomes. The single onerous provision remaining is for the GAO to audit the Fed’s monetary policy decisions, but since the Senate version limits that to a one-time event to look at policy during 2008-2009, you can bet that this minor interferance will be the end result in the final legislation.

It’s as if Congressional brains are detached from reality; that their brains are bifurcated or split in two and can’t possibly function to see the whole–or perhaps its just greed and corruption? All members agree that deficit spending is a serious threat to the long term viability of the nation, yet this legislation does nothing to merge financial regulators to reduce costs or create a wholly accountable financial regulator that will be effective next time. At the same time Fannie Mae and Freddie Mac, the quasi-government mortgage lenders that everyone agrees needs reforming, is omitted entirely from financial reform and though the Fed is rife with conflicts of interests in its lending and regulating powers, more power, authority, and purse are being given the Fed–particularily over consumer financial products and too big to fail financial institutions whether they are a bank or not. Never mind that the Fed aleady had the power intervene, to raise margin rates or interest rates to curtail speculation, the Fed is the man. But the majority in Congress also wanted to maintain the status quo; they get handsome lobbyist’s campaign contributions by governing these agencies and making them efficient and accountable by consolidating them into just one regulator would change how influence is rewarded–you got it– no votes for that.

So America, banks will still use your deposit money to speculate. There will be no cap on credit card and “pay day” lending arrangements, and the next time we have a financial crisis (2012-2015 is SB’s forecast) the Fed will be limited to a mere $4 trillion in bailouts. Ironically the Fed has successfully argued that it needs to be apolitical–ie removed from politics. Yet it has been the Fed who has lobbied using their constituent banks as mouthpieces. So there you have it, reform Congressional style–bought and paid for-reform to proclaim that Congress addressed the calamnity that never again will ‘too big to fail’ lead to a taxpayer bailout. We suppose that the $4 trillion is there money; that they are a profit making commerical enterprise. And when you grasp that that’s precisely how they think you understand why deficit cutting is so hard to do: they view your money as theirs to simply transfer to themselves. It’s called financial reform, remember.

June 11, 2010 - Economy, Politics