And So I Go: Yesterday, Today and Tomorrow

Financial Reform Diaster and the 800 lb. gorillas Fannie and Freddie

Posted on: May 21, 2010

This Heritage Report came out May 20 when the Financial Reform Disaster failed to pass but now it has.  I am posting the report because the information it presents is quite relevant.  We again find the Maine Senators and Scott Brown to be our traitors  who willingly gave the Democrats their victory.  This bill does one thing and one thing only: it allows a few big banks to take over the entire financial industry.  Not one thing in this bill would have stopped what happened in the fall of 2008. And NOTHING in the bill addresses the 800 pound gorillas Fannie and Freddie at all.   Not one provision!  I become more and more disheartened.  I thought the election results would scare some sense into the Democrats but apparently not in the Senate.  Perhaps enough Democrats will join with the Republicans in the House to stop this.  Well, I can dream can’t I  ??

At any rate We the People should understand what is being shoved down our throats now so we know what we are up against.  Knowledge will arm you and the Truth will set you free.  At least they will when coupled with a  strong heart and a refusal to live anyway but as free Americans.  BB


Majority Leader Harry Reid (D-NV) failed to end debate on Sen. Chris Dodd’s (D-CT) financial regulation bill yesterday when two Democrats broke ranks to vote with conservatives. The Dodd bill is already a big government monstrosity, expanding powers for existing Washington regulators as well as creating and empowering new ones. But frightened by the defeat of Sen. Arlen Specter (D-PA) and the near defeat of Sen. Blanche Lincoln (D-AR), Sens. Maria Cantwell (D-WA) and Russ Feingold (D-WI) issued statements following their “no” voted demanding that the bill further increase the power of Washington bureaucrats.

Specifically, Cantwell wants to criminalize violations of the bill’s extremely complex new derivatives provisions, and Feingold is demanding the resurrection of Depression Era prohibitions on banking diversification. Not only has our federal government already criminalized the violation of far too many  arcane regulations, but the derivatives provisions already in the bill are sure to drive investment, jobs and revenues out of our domestic markets and into foreign ones. And Feingold’s claims that restoration of the Glass-Steagall would prevent “too big to fail” bear no relation to reality. None of the major entities at the core of the 2008 financial crisis would have been affected by Glass-Steagall Act because none of them are commercial banks. Bear Stearns, Merrill Lynch, Lehman Brothers, AIG, Fannie Mae and Freddie Mac all dug their financial crisis graves by making terrible decisions that would have been perfectly legal under a Glass-Steagall regime.

Speaking of Fannie and Freddie, there is still nothing in this bill that addresses the perverse incentives and moral hazard that is created when the federal government sticks its nose into the housing market. Last year, the two financed or backed about 70% of single-family mortgage loans. They hold about $5 trillion in their investment portfolios. Both are losing money fast, with those losses being covered by the U.S. taxpayer. Last month, Freddie announced it had lost $8 billion in the first quarter of 2010 and would be asking for another $10.6 billion in taxpayer help. Not to be outdone, Fannie announced an $11.5 billion loss and asked for another $8.4 billion from taxpayers. That’s atop the nearly $145 billion of your dollars that Fannie and Freddie have already received. Fannie and Freddie alone prove this bill does nothing to end “too big to fail.” Fannie and Freddie should be partly wound down, the rest broken up and sold off — not replaced, reformed, or rejuvenated. The Dodd bill does none of that.

This bill extends the power of Washington at the expense of Economic Freedom in other ways too. It creates a permanent new bailout authority that undermines our bankruptcy system and the rule of law. And the new Bureau of Consumer Financial Protection is empowered to regulate the financial transactions of virtually any business including motorcycle manufacturers, retailers, car dealers and even coffee shops.

On Sunday, columnist Ross Douthat described the Dodd bill as just one example of “the real story of our time. From Washington to Athens, the economic crisis is producing consolidation rather than revolution, the entrenchment of authority rather than its diffusion, and the concentration of power in the hands of the same elite that presided over the disasters in the first place. … If Robert Rubin’s mistakes helped create an out-of-control financial sector, then naturally you need Timothy Geithner and Lawrence Summers — Rubin’s protégés — to set things right. … But their fixes tend to make the system even more complex and centralized, and more vulnerable to the next national-security surprise, the next natural disaster, the next economic crisis. Which is why, despite all the populist backlash and all the promises from Washington, this isn’t the end of the ‘too big to fail’ era. It’s the beginning.”

th, 2010 at 9:21am in Enterprise and Free Markets with 28 commentsPrint This Post Print This Post

Majority Leader Harry Reid (D-NV) failed to end debate on Sen. Chris Dodd’s (D-CT) financial regulation bill yesterday when two Democrats broke ranks to vote with conservatives. The Dodd bill is already a big government monstrosity, expanding powers for existing Washington regulators as well as creating and empowering new ones. But frightened by the defeat of Sen. Arlen Specter (D-PA) and the near defeat of Sen. Blanche Lincoln (D-AR), Sens. Maria Cantwell (D-WA) and Russ Feingold (D-WI) issued statements following their “no” voted demanding that the bill further increase the power of Washington bureaucrats.

Specifically, Cantwell wants to criminalize violations of the bill’s extremely complex new derivatives provisions, and Feingold is demanding the resurrection of Depression Era prohibitions on banking diversification. Not only has our federal government already criminalized the violation of far too many  arcane regulations, but the derivatives provisions already in the bill are sure to drive investment, jobs and revenues out of our domestic markets and into foreign ones. And Feingold’s claims that restoration of the Glass-Steagall would prevent “too big to fail” bear no relation to reality. None of the major entities at the core of the 2008 financial crisis would have been affected by Glass-Steagall Act because none of them are commercial banks. Bear Stearns, Merrill Lynch, Lehman Brothers, AIG, Fannie Mae and Freddie Mac all dug their financial crisis graves by making terrible decisions that would have been perfectly legal under a Glass-Steagall regime.

Speaking of Fannie and Freddie, there is still nothing in this bill that addresses the perverse incentives and moral hazard that is created when the federal government sticks its nose into the housing market. Last year, the two financed or backed about 70% of single-family mortgage loans. They hold about $5 trillion in their investment portfolios. Both are losing money fast, with those losses being covered by the U.S. taxpayer. Last month, Freddie announced it had lost $8 billion in the first quarter of 2010 and would be asking for another $10.6 billion in taxpayer help. Not to be outdone, Fannie announced an $11.5 billion loss and asked for another $8.4 billion from taxpayers. That’s atop the nearly $145 billion of your dollars that Fannie and Freddie have already received. Fannie and Freddie alone prove this bill does nothing to end “too big to fail.” Fannie and Freddie should be partly wound down, the rest broken up and sold off — not replaced, reformed, or rejuvenated. The Dodd bill does none of that.

This bill extends the power of Washington at the expense of Economic Freedom in other ways too. It creates a permanent new bailout authority that undermines our bankruptcy system and the rule of law. And the new Bureau of Consumer Financial Protection is empowered to regulate the financial transactions of virtually any business including motorcycle manufacturers, retailers, car dealers and even coffee shops.

On Sunday, columnist Ross Douthat described the Dodd bill as just one example of “the real story of our time. From Washington to Athens, the economic crisis is producing consolidation rather than revolution, the entrenchment of authority rather than its diffusion, and the concentration of power in the hands of the same elite that presided over the disasters in the first place. … If Robert Rubin’s mistakes helped create an out-of-control financial sector, then naturally you need Timothy Geithner and Lawrence Summers — Rubin’s protégés — to set things right. … But their fixes tend to make the system even more complex and centralized, and more vulnerable to the next national-security surprise, the next natural disaster, the next economic crisis. Which is why, despite all the populist backlash and all the promises from Washington, this isn’t the end of the ‘too big to fail’ era. It’s the beginning.”

3 Responses to "Financial Reform Diaster and the 800 lb. gorillas Fannie and Freddie"

The question that begs to be answered is when will a responsible news source explain to the American people about this allegedly”transparent” Administration’s goal to destroy our constitution?
The debt that is being accumulated is beyond an average person’s imagination, and these politicians will all be gone by the time the full effect falls upon our children and grandchildren.
Washington counts on all of us sitting back and waiting for the rainbow that is promised at the end.
However, instead of a rainbow, take a close hard look at the gulf of Mexico and I’m afraid we’re in for an oil bath instead.

The question that begs to be answered is when will a responsible news source explain to the American people about this allegedly”transparent” Administration’s goal to destroy our constitution?
The debt that is being accumulated is beyond an average person’s imagination, and these politicians will all be gone by the time the full effect falls upon our children and grandchildren.
Washington counts on all of us sitting back and waiting for the rainbow that is promised at the end.
However, instead of a rainbow, take a close hard look at the gulf of Mexico and I’m afraid we’re in for an oil bath instead.

When did I ever say this before? Who’s screening today, Michelle?

Right on Paul. and as if this isn’t enough the House is passing spending bills right and left. Yesterday a bill was submitted to bail out the union pensions and the teachers pensions. It is like other world aliens have taken over congress and they don’t speak or read English. And the President and his henchmen are working overtime against the American people. I blogged about what the labor Relations Board did to assure the unions being able to get into the transportation business including rail and air. With all these unionized workers the bosses will collect all kinds of union dues but the pensions need to be bailed out!

I wish I could just turn everything off and go paint a pretty picture, but I can’t. i have to turn on the news and turn on the computer to see what is happening. Glenn Beck says it is coming very quickly now and will catch us unprepared and flat footed. BB

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