The proposed bank regulations, all driven by President Obama’s war on Wall Street, would limit big bank’s trading and size. Obama claims that the nation will never again be held hostage by institutions deemed “too big to fail”.
Well, here’s a clue – the only ones who claimed they were too big to fail and threw all that money at them are the same ones now trying to regulate them into noncompetitiveness. You’d almost think this was part of a plan if you didn’t believe they weren’t smart enough or quick enough to do such a thing. But, as they’ve claimed, they won’t let a crisis go to waste.
In fact, this is another battle in the long class war against the rich. Nothing symbolizes the “rich” like Wall Street. And nothing serves Democrats in trouble better than a populist cause (or at least one they deem to be populist). So while voters continue to send messages to the Democrats via VA, NJ and MA, health care reform implodes and the President’s job approval rating tanks, he’s warring on the institutions which are critical to the economic recovery of the nation.
How freakin’ tone deaf can one be?
Mayor Bloomberg has some immediate local issues that concern him – possible layoffs and the erosion of the tax base. But he also recognizes that handicapping US banks when no such handicaps exist for foreign banks, hurts their long term competitiveness and will therefore have negative long term consequences.
Obama’s proposals would prevent banks or financial institutions that own banks from investing in, owning or sponsoring a hedge fund or private equity fund.
He called for a new cap on the size of banks in relation to the overall financial sector that would take into account not only bank deposits, which are already capped, but also liabilities and other non-deposit funding sources.
The proposed rules also would bar institutions from proprietary trading operations that are for their own profit and unrelated to serving customers
According to sources, Geithner says the proposed regulations “do not necessarily get at the root of the problems and excesses that fueled the recent financial meltdown.”
He’s not alone in that criticism:
Lawrence White, a professor at New York University’s Stern School of Business and a former regulator, said Obama’s proposals were “a solution to the wrong problem.”
“They have this rhetoric that it was proprietary trading that was the problem,” White said. “That’s wrong.”
Of course the Obama war on Wall Street is certainly having an effect – bank shares have declined as has the dollar against other currencies.
If you don’t get the idea that this is mostly an ideologically driven “war” trying to cash in on populist anger at a time when nothing is going well for the administration, you’re not paying attention. It also points to an “war of choice” based in a very poor understanding of economics and the fact that we’re engaged in a global economy where competitiveness is critical. If these regulations pass and when the recovery falters because banks are hobbled and noncompetitive, I’m sure that somehow the White House will again play the “greed” card out in a effort to hide the effects of their own short-sighted and ideologically driven economic malpractice.
[ad] Empty ad slot (#1)!
The myth is that without government regulation, the market would certainly do everything it could do to kill or cheat its customers. Of course most of us realize that doing those things is a sure way not to be in business long. But for a significant number of others, that myth is alive an well. A recent example, however, provides a perfect example of the absurdity of that notion. And, I suggest that it should be applied to health care as well.
The U.S. Department of Agriculture says the meat it buys for the National School Lunch Program “meets or exceeds standards in commercial products.”
In the past three years, the government has provided the nation’s schools with millions of pounds of beef and chicken that wouldn’t meet the quality or safety standards of many fast-food restaurants, from Jack in the Box and other burger places to chicken chains such as KFC, a USA TODAY investigation found.
McDonald’s, Burger King and Costco, for instance, are far more rigorous in checking for bacteria and dangerous pathogens. They test the ground beef they buy five to 10 times more often than the USDA tests beef made for schools during a typical production day.
And the limits Jack in the Box and other big retailers set for certain bacteria in their burgers are up to 10 times more stringent than what the USDA sets for school beef.
So the burger at Jack in the Box is safer than the mystery meat your child is served at school. Children are served tons of chicken in school each year that KFC won’t touch (KFC doesn’t do “spent hens” but your child does).
Jack in the Box and KFC have to please and answer to customer demands if they want to stay in business. If KFC makes you sick because of bacteria, you and others will most likely vote with your feet and go elsewhere. What is your choice if that happens in a government school?
Now, think health care.
End of story.
[ad] Empty ad slot (#1)!
This one is right out of the “you’ve got to be kidding me” category.
It seems that stimulus funds, you know that 787 billion bill without an “ounce” of pork in it, are funding a study at the University of Illinois (wow, there’s a surprise) to look at “the relationship between fat taxes and food consumption, diet quality, and obesity.”
In reality it is a study to assess the feasibility of taxing soda, under the guise of fighting obesity, to fund health care reform. You remember all the trial balloons that were launched earlier in the year concerning this tax? Well, now taxpayers are funding research to figure out if it is feasible to further tax taxpayers.
And does anyone really doubt the outcome of the study? Really?
This is perfect example of how out of control government has become. Spending money it doesn’t have on a study to see if it can tax you more to make up for some of the money it’s spending that it doesn’t have. That should be a line in a comedy skit, not a reality.
This also makes the point that government would have no hesitation whatsoever – if it can manage to wrangle the power to do it – in deciding what you should or shouldn’t consume – all in the name of health care dollars – and punishing you if you don’t conform. And, of course, regulators and bureaucrats can’t assume that power unless Congress hands it to them through this health care reform monstrosity.
While you’re noodling over that, you might also consider another voice that came out today in opposition to the present health care reform bill. Dr. Jeffery Filer, dean of the Harvard Medical School said:
Speeches and news reports can lead you to believe that proposed congressional legislation would tackle the problems of cost, access and quality. But that’s not true. The various bills do deal with access by expanding Medicaid and mandating subsidized insurance at substantial cost—and thus addresses an important social goal. However, there are no provisions to substantively control the growth of costs or raise the quality of care. So the overall effort will fail to qualify as reform.
Make sure you read the whole thing.
[HT: Katherine P.]
[ad] Empty ad slot (#1)!
From Reason TV (remember corporatism v. capitalism?):
[ad] Empty ad slot (#1)!
This story slipped quietly under the radar last week as we had the UN speech, the Iran revelation and the G20.
An examination of the Waxman-Markey cap-and-trade legislation finds it contains 397 new regulations and 1,100 new mandates. And you’ll be pleased to know it will simplify your life, make child birth pleasant and cost you nothing.
But you can rest assured there is most likely something for everyone because this isn’t just about controlling CO2 emissions. This is about more control of your life via the radical green agenda.
Take homeowners for instance. If you thought selling your house was a pain in the kiester before, Mr. Waxman and Mr. Markey can’t wait to make it even more fun for you:
One of them would affect almost everyone who buys or sells a home. If Waxman-Markey becomes law, homes for sale that qualify as “federally related transactions” — which is almost all of them — would be required to undergo an environmental inspection.
Inspections are not free. Nor is fixing the inevitable violations. Compliance with new energy-efficiency standards would make homes, especially older ones, more expensive. Selling one’s home would become even harder than it already is in this down market if Waxman-Markey-style cap and trade becomes law.
And that is just one of the unintended consequences.
Suppose you have a window that isn’t quite airtight or your appliances are a little too old. Maybe they’re not Energy Star certified. You’d have to replace them before you would be allowed to sell your home.
Suppose you wanted to sell your house “as is” and let the person who buys it fix it up, for a suitable discount of course.
That is no longer a choice you’ll have. The buyer and seller wouldn’t be allowed to make that decision anymore. The party that continuously claims that “choice” is important to them apparently believe that particular choice is one neither the buyer or seller should have. The transaction is subject to the regulations of Mr. Waxman and Mr. Markey’s bill and you’ll not sell anything government inspectors haven’t deemed “green” enough to sell and certified as such.
Nothing, of course, could go wrong with that, could it? And of course, the article deals with just one of the unintended consequences. Let me again point out that it includes 397 new regulations – that means there’s at least one unintended consequence for each of them (and possibly more) and it will most likely be a nasty surprise.
In fact, take a good look at what could be more of the unintended consequences from just the regulation requiring home inspections:
To sum up: Inspecting homes for sale for their environmental friendliness would raise home prices. Buying or selling a home would become an even more onerous process than it already is. And there’s an easy way to dodge the bullet: Rent instead of own. If enough people did that, the inspection requirement would fail to achieve its goal of making homes more energy efficient.
And that in the face of and in conflict with policy which seeks to increase home ownership.
When regulation becomes too arduous, what do people normally do? Adjust, avoid and do what is easier and cheaper.
Is there any reason, depending on what the other 396 regulations contain, that the same won’t happen with them?
This is where we’re headed – regulators literally telling you what trees to plant and how to plant them (that’s actually contained in the Waxman-Markey bill as pointed out in a previous post). Is this the government you want? Is this the level of government with which you’re comfortable?
If they can require you to plant your trees and fix up your home their way, what else might they figure they should have the power to do?
[ad] Empty ad slot (#1)!
The case against?
Bernie Madoff, of course. A man who bilked investors of some 80 plus billion dollars over a couple of decades knew how to fool the regulators and was not shy about passing on that information to those who worked for him.
Money quote (no pun intended):
“You know, you don’t have to be too brilliant with these guys because you don’t have to be …”
Apparently the regulation regime, which should have easily have caught Madoff, failed too because regulators got to cozy with him:
“The guys . . . ask a zillion different questions and we look at them sometimes and we laugh, and we say, ‘Are you guys writing a book?’ ” he said.
“These guys, they work for five years at the commission then they become a compliance manager at a hedge fund now.”
Yeah – we need more regulations. That’s the ticket. More. That’ll fix it.
The regulations were there – the regulators, however, failed to enforce them. My guess is that a close examination of why we ended up in the financial pickle we did had less to do with the lack of regulation and more to do with what let Bernie Madoff skate for so long – a criminal lack of oversight by regulators as authorized by law.
[ad] Empty ad slot (#1)!
In this podcast, Bruce, Michael, and Dale discuss the Obama “Muslim” speech, and the socialization of the economy.
The direct link to the podcast can be found here.
The intro and outro music is Vena Cava by 50 Foot Wave, and is available for free download here.
As a reminder, if you are an iTunes user, don’t forget to subscribe to the QandO podcast, Observations, through iTunes. For those of you who don’t have iTunes, you can subscribe at Podcast Alley. And, of course, for you newsreader subscriber types, our podcast RSS Feed is here. For podcasts from 2005 to 2007, they can be accessed through the RSS Archive Feed.