Wednesday, May 5, 2010

Fun Facts About Financial Reform

With the financial reform bill wending its way to a Senate vote, I decided to actually read the thing. Needless to say, it is - like most legislation - a difficult read. However, there are some little nuggets in there that have yet to be mentioned in the partisan spitball fight.

Top of my list is the Bureau of Consumer Financial Protection. This would be created as part of the Federal Reserve. Excuse me? The Fed? The ubersecretive Fed? The same one that sees transparency and secrecy as synonymous? That Fed? They would be given the responsibility to protect consumers?

Am I the only one that sees the literal idiocy of handing this task to a semi-independent organization that is currently hiding bank information to protect the banks from their own customers? I am not making that one up. Bernanke made it clear that he was hiding the names of which bank borrowed how much from the Fed to "protect the banks' images." Apparently he thinks telling the customers the truth about the financial stability of a bank might cause them to move their accounts to a more stable bank. Well, duh.

Yet Dodd, Shelby and company want to hand this group the responsibility to protect consumers from the banks. Are they kidding? Bernanke and Geithner (as New York Fed president) may have set an all time record for closed door Sunday deals to protect the banks and shield them. This is the same group that made Goldman and GMAC commercial banks overnight with zero investigation and verification. And they are expected to protect us? The Federal Reserve wouldn't know a consumer if they ran one over. They have never dealt with consumer issues and have, in fact, avoided them.

But, for some unknowable reason, Dodd, Shelby and the the rest of the corrupt Democrat/Republican lie machine want to hand more power to the Fed. And that is in the face of Bernanke's ongoing opposition to any kind of transparency at the Fed. This alone is enough to scuttle the bill if any member of the Senate was honest of genuinely interested in anything except the next election.

Obama has endorsed this idiocy. Geithner, Schapiro and the rest of his pre-failed financial team all love the idea. Why? Why do they want to hand consumer protection to the one agency that specifically does not deal with consumers? We can all speculate as tot he reasons. I firmly beleive it is to make sure that nothing changes.

Once I got past that in my reading, I found a very interesting little piece. One that stopped me in my tracks.

This bill would repeal the Gramm-Leach-Bliley Act prohibition against the regulation of security-based swaps. For those who don't know, Gramm-Leach was the 1999 Clinton endorsed act that lifted the Glass-Steagal 1932 prohibition on commercial banks engaging in investment bank activities. The idea in 1932 was to prevent banks from gambling with depositors' money.

Since the meltdown of 2008, it has become apparent that securities swaps were a large part of the problem. Lots of feckless politicians are demanding prosecution for this. Except for one problem. Lots of those same politicians passed a law prohibiting any regulation.

In an earlier post, I posited that Goldman most likely did not violate and criminal statutes. As it turns out, there weren't any to violate. See, the kids at Goldman, Lehman, Bear and the rest knew that swaps were unregulated. They knew that the law prohibited regulation and by extension, government intervention. They knew this because they had a hand in making it so.

Democrats and Republicans acting indecently in a bipartisan way. It was Bill Clinton's Treasury whiz kid Bob "I got me a corner office waiting on Wall Street" Rubin that pushed Gramm-Leach along with Republican Gramm. Once that law was signed it was off to the races in a totally legal way. Put bluntly, they could not break a law that did not and could not exist. Even if the lazy pencil pushers at SEC and the Fed wanted to get involved, they could not.

One cannot help but wonder why this has not been more of a topic the last couple of years. After countless hearings, the protestations of 2 presidents (Bush and Obama), the nonsense from Paulson, Geithner and Bernanke, not one of them mentioned this little fact. None wanted to admit that they set the table for what happened. Not one time was this mentioned. Not even by the kids from Wall Street trying to defend their activities.

I am not sure what will happen with the financial reform bill. But I do know one thing. None of them are telling us the truth here. Not Obama and his economic team of super-failures. Not Dodd or Shelby. Not Barney Frank.

And that is a automatic firing offense. Come November, I suggest we fire the lot of them. All of them. The entire House and those Senators up for re-election. By failing to mention their own contribution to the mess, they have failed us all and - in my opinion - are more responsible for the meltdown than Goldman and the rest.

As much as it pains me to say this again, I do not think the Wall Street gang broke the law. Stretched, pushed and loopholed, yes. But violated, no. And Congress knew this. Obama and Bush knew this. The economic advisors both administration used (and they are actually the same failures) knew this.

As they say in baseball, toss the bums out.

No comments:

Post a Comment