Senate Banking Reform - 14 Fatal Flaws

Discussion in 'Politics' started by Foxfyre, May 1, 2010.

  1. Foxfyre
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    Foxfyre Eternal optimist Gold Supporting Member Supporting Member

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    While acknowledging that there are some good provisions in the bill, the Heritage Foundation has identified fourten 'fatal flaws' in the pending legislation. The President and Congressional majority leaders are doing their damndest to ram this one through in a hurry and amongst taunts of "party of no", it looks like the GOP is going to cave and not put up much of a fight to block it.

    And assuming the Heritage Foundation analysis is pretty much on target, how much more of this hasty massive legislation can our Republic stand before it collapses under the sheer weight of it?

    Link to the Heritage Foundation analysis:
    Senator Dodd?s Financial Regulation Plan: 14 Fatal Flaws | The Heritage Foundation

    Link to the full text of the bill:
    www.senate.gov - This page cannot be found.

    The 14 Fatal Flaws:

     
  2. Foxfyre
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    Foxfyre Eternal optimist Gold Supporting Member Supporting Member

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    And from CATO, here is why No. 14 on that list up there is so stunning:

    Excerpt:
     
  3. kyzr
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    kyzr Gold Member

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    BINGO!!

    One of the answers to "what caused the Great Recession". Barry and Dodd fucking-up Fannie & Freddie.
     
  4. saveliberty
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    saveliberty Diamond Member

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    41 Senators know about these flaws too. The delay tactic was for just these reasons. It is basically a Hail Mary from the Democrats before November. Except they still don't get it.
     
  5. Toro
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    Toro Diamond Member

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    1. We already have a de factor policy of not allowing firms that are too big to fail. At least putting in policies allow us to address issues systematically.

    2. Interesting criticism. Might not matter when the derivatives markets are blowing up.

    3. We already have a de facto bailout policy. There should be a mechanism for the wind-down of large institutions like there is for small deposit-taking institutions.

    4. Its better for the banks to take the first $50 billion hit than the taxpayers. Currently, the banks put up the first $0. This is better. The idea that this creates moral hazard is a canard. We already have moral hazard.

    5. Formalizes what already occurs.

    6. Formalizes what already occurs.

    7. The bill provides additional protection to consumers. Borrowers were lied to and sold fraudulent mortgages. We want to encourage this why?

    8. Fair criticism. This is why some Democrats wanted it to be a separate institution unto itself but was watered down by lobbyists for the financial industry.

    9. Bad. Shouldn't happen. Payoff to the Democrats largest source of funding.

    10. Don't know enough about it to comment. I do know that the OCC overrode state consumer protection laws for exactly the same criticism, invoking an obscure law from the 1860s which prevented or hampered states from enforcing anti-fraud provisions, which ultimately allowed sleazebag mortgage companies to egregiously jam borrowers with fraudulent loans.

    11. One of the largest financial companies in the world is GE Capital, which is subject to far less regulation than most financial companies. GE Capital, and thus GE itself, would have collapsed had the government not guaranteed the commercial paper markets, putting taxpayers at huge risks. If GE Capital is going to get a de facto government guarantee, they should be regulated by the government.

    12. The derivatives market is opaque and controlled by a handful of firms who skim $20 billion off the financial markets, i.e. you and me, so that derivatives traders can pay themselves multi-million bonuses. Markets work best when they are transparent. Derivatives are anything but. The structured products markets was a big reason why the financial crisis occurred. Forcing daily mark-to-market accounting on an exchange would mean the probability of a similar AIG-like implosion would be far less likely. Stocks, bonds, futures, options, commodities, etc., all trade on exchanges, why not derivatives, a $700,000,000,000,000 market.

    13. This criticism makes me wonder if the Heritage Foundation is merely shrilling for managements of big corporations, which is a very different constituency than the owners of big corporations. This is one of the best provisions in the bill. One of the big weaknesses of American corporations is corporate governance at the board level, which is often incestuous and does not work for shareholders. This provision will allow shareholders - the owners of the corporation - to have a greater say on how their company is run. Shareholders are often subordinate to management at the board level. There needs to be more shareholder democracy at US corporations.

    14. I agree totally that the GSEs need to be restructured, but this is a criticism of omission. One could find many omissions that this bill does not address.
     
    Last edited: May 1, 2010
  6. kyzr
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    kyzr Gold Member

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    Very impressive assessment Toro. I'd try for regulations that create good US jobs as opposed to trying to regulate international casinos. I'd prohibit derivatives and short-selling. Only capital raising and job creation should be promoted. Break-up AIG, and make damn sure that no company can "capture" an agency like the SEC. I also like Obama's attempts to nail off-shore tax-evaders, like the 55,000 who have Swiss bank accounts. Its time to make Wall Street help the US instead of being international maggots.
     
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  7. Flopper
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    Flopper Gold Member

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    Consider the source. The Heritage Foundation is a conservative think tank which has been in bed with the Republican since it was founded in 1977. I think they have a few good points but many of the points are subject to argument.
     
  8. Foxfyre
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    Foxfyre Eternal optimist Gold Supporting Member Supporting Member

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    I think you should take another look at the Heritage Foundation history. They were scathingly critical of the snafus, ommissions, and boondoggles created by the Bush administration. They are absolutely NOT in bed with the Republicans. They ARE in bed with solid conservative principles.
     
  9. Xenophon
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    Xenophon Gone and forgotten

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    Just wasn't isn't needed, more bad law.
     
  10. Foxfyre
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    Foxfyre Eternal optimist Gold Supporting Member Supporting Member

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    Some of the stuff in the bill was needed, and, the Heritage Foundation analysts have noted those. These are the 14 points of the bill they do believe are fatally flawed and should be reworked or removed from the bill.

    Nobody--certainly not the Heritage Foundation--is saying that no new rules or regulation is needed.

    The quarrel is in what rules and what sort of regulation is needed to accomplish reform while not creating a lot of unintended bad consequences.
     

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