First we had the Bush/Pelosi/Reid $700 billion bail out in September of 2008. Now we get the “to big to fail” legislation “reform” banking legislation. A nasty piece of legislation peddled to the ignorant masses as “banking reform legislation.” What it does is pure Washington evil.
The first problem with the legislation is it creates new laws that will burden banks with additional compliance cost. This is an old favorite of the big corporations. Why? Big corporations, or in this case banks, are better able to absorb the cost of costly federal regulations. Medium and smaller banks will be less able to afford these additional costs. Big guys 1 small guys 0. The business plan of using politicians as the front guys to drive your competitors out of business is an old and well established tradition both in Washington and across the pond in London where it all started in the 16th century.
Barney Frank likes screwing the gentiles as much as he can
We see this Washington coddling of an industry with bureaucratic red tape all the time. The drug industry has almost completely eliminated the threat of new competitors using the FDA as a “barrier to entry” combined with drug patented laws to crate monopolies on drugs and worldwide oligopoly cartels. Long seven year waits and millions spend on testing of new drugs scares off any new entrepreneur from even trying to do better than the select few drug producers who enjoy oligopoly status thanks to government intervention into the marketplace for their benefit. And it is sold to the public under the guise of “consumer protection.”
Everyone thinks government regulation is bad. It is for consumers and medium to small competitors but is a huge bonanza for large corporations and government bureaucrats. The more burdensome and costly the regulations the better it positions the larger corporations to maintain and increase market share at the expense of the marginal competitors. Government red tape makes big corporation dreams of oligopolies come true. And so it is with Dodd-Frank legislation. More red tape for the banking industry equals less competition for the big guys.
The second problem is it does nothing to regulate the main culprits of the financial melt down Freddie Mac and Fannie Mae. There is nothing in the bill to repeal any of the Community Reinvestment Act legislation that forced private sector banks to abandon traditional banking standards in favor of race based loans to unqualified individuals. Basically when the coast is clear Fannie and Freddie can go back to buying sub-prime mortgages from private banks and bundling them up and selling them just like last time. Congress and Acorn can resume pressuring private banks to lend to minorities or else be subjected to charges of racism and ridicule from Washington politicians. Government quotas must be meet or else! 90% of Countrywide’s loans were sold to Fannie, Freddie or backed by Ginnie Mae. Nothing changes just another bubble waiting to happen. When it comes crashing down again this new legislation gives Washington bureaucrats the power to bypass congress and write a bail out check. Who needs all that political turmoil like in October of 2008? Just shut your mouth gentiles and write that check for Goldman Sacks.
Chris Dodd is your typical dumb white guy who does whatever the smart boys tell him to do. He pretends to be a financial wizard but is too stupid to read his own mortgage contract. This asshole needs to go bye bye.
The third problem is the legislation completely ignores the role of the Federal Reserve in the crisis. Alan Greenspan and his 1% federal funds rate in 2003 was like a fireman arriving at a five alarm fire with his hose connected to the local gas station spraying fuel directly on to the inferno. Greenspan pleads ignorance but he wasn’t so ignorant back in the late 80’s when he jacked up the fed funds rate to 8.9% during the S&L crisis or warned of “irrational exuberance” in 1997 three years ahead of the NASDAQ bubble bursting. The Federal Reserve gets a complete pass in the blame game and is rewarded with new increased power over member banks. I guess crime pays if you have the right connections.
So what did we get? Besides screwed basically your standard Washington legislation protecting the big guys like Citibank, rewarding the guilty Federal Reserve, ignoring the redistributing the wealth players Fannie and Freddy, no change in tax law helping investment or penalizing debt, no acknowledgment of Washington’s role in the crisis, just another bend over and get screwed. I am sure Barney Frank loves every second of this.