The same garbage of disingenuousness we saw about ‘healthcare’ is already started when it comes to financial ‘reform’.
Just as the legislation that purported to be ‘healthcare reform’ was really ‘health insurance reform'(HIR), so too is the legislation that is being crafted in the Senate NOT ‘financial reform’ but simply something to make the public think something meaningful has occurred regarding the fraud and negligence that led to Sept. 2008 and the ‘great collapse’.
First of all you have Obama posturing about regulating derivatives when the fact of the matter is that the derivatives that contributed to the financial bailout were the OTC (over the counter) type (such as what is being evidenced by the GS suit) and those types of derivatives are barely touched in the legislation. All Obama is doing is saying that the lobbyists pressures to not regulate derivatives at allis to be resisted by the Congress.
"So, the derivative legislation looks quite good if you read the first page and look at the headlines. But then there are exemptions inside it. And the question is how big are the exemptions. The thing that we care about most is on the too big to fail issue. So, are we going to have real constraints on the size and scope of these banks? Things that the Obama Administration unveiled in principle to great fanfare in January."
Then you have Obama stating "“Never again will taxpayers be on the hook because a financial company is deemed ‘too big to fail,’” he said.".
YET, that is then followed by "In the face of stiff GOP opposition, Obama administration officials want Senate Democrats to purge a $50 billion fund for dismantling "too big to fail" banks from legislation that aims to protect against a new financial crisis.
And you have the president of the Federal Reserve Bank of Kansas City stating: "Unfortunately, the proposal for regulatory reform now before the Senate does not eliminate the concept of too-big-to-fail, and it deliberately narrows the central bank’s focus to Wall Street alone.
This undermines reform in at least two important ways.
First, the decision to close a large financial firm that is failing would depend on the Treasury Department’s petitioning a panel of three United States Bankruptcy Court judges for approval to place the firm in receivership with the Federal Deposit Insurance Corporation. The panel would have 24 hours to make a decision, and if it turned down the petition, the Treasury could re-file and subsequent appeals could be considered. So a decision to put the firm in receivership might not be timely enough under the circumstances. And experience tells us that the urgency of the moment would likely motivate politically sensitive officials to simply pursue a bailout."
Anyone remember the Paulson push for the bailouts and how the warnings to the congress critters served to move them faster than the snails pace they usually move?
"Too big to fail" institutions are MNB’s (multinational banks) and DO NOT fall under U.S. bankruptcy laws exclusively. MORE importantly, their size does NOTHING for their profitability and service provisioning:
"JAMES KWAK: This other part of the problem which Simon and I talk about more in the book, and that we don’t think is fully solved by the legislation in the Senate, is why do you have to have these too big to fail banks in the first place? So, we think that’s the obvious and simplest and almost unarguable solution that you should simply not have banks that are too big and too interconnected to fail.
SIMON JOHNSON: There are no benefits to society, Bill, from having banks that are larger than $100 billion in total assets. This is a well-established fact. The evidence does-
"BILL MOYERS: So, you would break up the banks. That’s what you would do, right?
SIMON JOHNSON: We would set a hard size cap on the banks. And the banks, in order to comply with that, would have to break themselves up. So, take a bank like Goldman Sachs, for example. It’s about ten times bigger than what we would be comfortable with. And, you put that cap in– they have to figure out how to do it. They have a fiduciary responsibility to their shareholders not to lose value as they comply with this law, not a regulation, law, right?"
Johnson brings up a VERY VALID point that MUST be in such legislation called ‘Financial Reform’ and that LAWS ,not regulations MUST be in the legislation as "All regulated industries end up with the industry capturing the regulators."
As Simon Johnson said "And that’s why, again, legislation is helpful,but if you’re going to have the same kind of incentive structures on Wall Street and the same degree of concentration, the same degree of political power, it’s likely that we’ll have another financial crisis."
And the legislation does NOTHING to address "incentive structures on Wall Street,the same degree of concentration, the same degree of political power" as now existent.
So gather the ammo of the pen and let the media,Congress,et al, know that the legislation being called ‘financial reform’ is a complete misnomer.