Leave It To Experts: The Bureaucrats

[PoliticalChic]

1. "As established under the Dodd-Frank Act, the Financial Stability Oversight Council (FSOC) will provide, for the first time, comprehensive monitoring to ensure the stability of our nation's financial system.

2. The Council is charged with identifying threats to the financial stability of the United States; promoting market discipline; and responding to emerging risks to the stability of the United States financial system.

3. The Council consists of 10 voting members and 5 nonvoting members and brings together the expertise of federal financial regulators, state regulators, and an insurance expert appointed by the President."
Financial Stability Oversight Council





4. "But as we saw from the trading losses at J.P. Morgan Chase earlier this year and from the collapse of MF Global late last year, the FSOC has proven incapable of the promised oversight – and no amount of money or bureaucracy is likely to improve the situation.

5. ...a Washington bureaucracy serving as a watchdog for the financial system is not new. Indeed, that’s exactly what Sen. Claude Swanson of Virginia had in mind when he shepherded the Federal Reserve Act through Congress in 1913 for President Woodrow Wilson: “These reserve banks, practically under Government control and supervision, having a broad vision of financial matters, can be used to prevent dangerous inflation or ruinous depression,” Swanson argued. “They will have a steadying influence on the finances of the country and produce that stability which is the most propitious for the growth and development of the Nation.”

6. Within two decades of its creation, the Fed presided over, and many believe caused, the most ruinous economic meltdown in U.S. history, the Great Depression.




7. ...President Ronald Reagan signed Executive Order 12631 creating the Working Group on Financial Markets.... this did little to forestall the recent financial crisis.

8. In Washington, when a bureaucracy fails to accomplish its assigned goal politicians typically don’t do away with the agency, they create another agency with the same goal. That’s how we got the FSOC.

9. Instead of installing leadership with a strong background in the management of large financial institutions, or with a background in regulating such institutions, the Obama administration appointed Amias Gerety to lead the council. Gerety’s experience includes stints as an entry-level consultant at Oliver Wyman, a year with the John Kerry presidential campaign, and brief stints at two nonprofits: the Center for American Progress and Save the Children.




10. The FSOC’s unwieldy bureaucracy and weak, politicized leadership – haplessness in the face of crisis – are hallmarks of modern Washington governance.

At this point, the Financial Stability Oversight Council clearly is incapable of providing either financial stability or oversight. It should be eliminated."
The Financial Stability Oversight Council: Late To Crises Every Time - Forbes




Bureaucrats.....government picking winners and losers????


How about we go back to the original instructions...the United States Constitution....and refer to Article I, section 8.



....and throw the bums out.

 

[william the wie]

PC, have you checked the different rules for UK, EU, Japan and China. Bank lending could drop by 50% or more.

 

[EdwardBaiamonte]

PC, have you checked the different rules for UK, EU, Japan and China. Bank lending could drop by 50% or more.

yes, even in heavily regulated socialist Europe they were not able to prevent this financial crisis. And even in the very heavily regulated USSR they were not able to achieve 30% of our deregulated standard of living.

Warren Buffett: "There are significant limits to what regulation can accomplish. As a dramatic illustration, take two of the biggest accounting disasters in the past ten years: Freddie Mac and Fannie Mae. We're talking billions and billions of dollars of misstatements at both places".

Now, these are two incredibly important institutions. I mean, they accounted for over 40% of the mortgage flow a few years back. Right now I think they're up to 70%. They're quasi-governmental in nature. So the government set up an organization called OFHEO. I'm not sure what all the letters stand for. [Note to Warren: They stand for Office of Federal Housing Enterprise Oversight.] But if you go to OFHEO's website, you'll find that its purpose was to just watch over these two companies. OFHEO had 200 employees. Their job was simply to look at two companies and say, "Are these guys behaving like they're supposed to?" And of course what happened were two of the greatest accounting misstatements in history while these 200 people had their jobs. It's incredible. I mean, two for two!

Courtesy A. Smith:FDR created Fannie.
LBJ Privatized Fannie - creating an "enron" like environment:
Greg Mankiw's Blog: Thanks, LBJ

Carter's Community Reinvestment Act - accelerated by Clinton - pushed risky loans:
Community Reinvestment Act - Wikipedia, the free encyclopedia

Clinton pushed Fannie into Subprime - the most critical mistake:
Andrew Cuomo and Fannie and Freddie - Page 1 - News - New York - Village Voice

Even the NY Times figured this out: Fannie Mae Eases Credit To Aid Mortgage Lending - NYTimes.com

Bush and McCain attempted to reform Fannie on 17 occasions
Bush Called For Reform of Fannie Mae & Freddie Mac 17 Times in 2008 Alone Only To Have Dems Ignored His Warnings :: Political News and commentaries :: Hyscience

The risky subprime loans fueled another layer of risk - derivatives
https://www.istockanalyst.com/article/viewarticle/articleid/2947518

The LA Times reported on Clinton's "subprime" success in 1999:
Minorities' Home Ownership Booms Under Clinton but Still Lags Whites' - Los Angeles Times



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