FinReg bill just a ruse. Really.
It’s amazingly sad that the majority of the commentariat in the media and the blogosphere see the new regulation as actual “reform” with teeth, as something other than political theater:
Analysts pored over the specifics of the deal as they emerged on Friday and expressed a wide array of views about the impact it would have. Some saw the bill as more of a political statement than a practical measure that could prevent another financial meltdown. Others said banks’ costs would increase, but banks would pass the increased costs along to consumers.
Richard Bove, a banking analyst with Rochdale Securities, said the bill would not severely curtail banks’ operations.
“I don’t see there being a tremendous clampdown on the ability of banks to make money,” he said.
“The banks will have numerous methods of getting around the most onerous provisions in this bill to maintain their earnings growth,” he added. “But the things they will do will increase the cost of banking to everybody in this country.”
For instance, Mr. Bove pointed to last year’s credit card bill, which led banks to push up rates pre-emptively or reduce customers’ credit limits.
“You’re going to get a letter from your bank saying you now have to pay $1 to $15 a month to pay for this bill,” he said. “The banks are going to get the money back because the consumer is going to pay for the bill, and that’s the killer for the consumer.”
Every decade or so, a bubble happens, irrational exuberance reigns and markets overreach. Bubbles and bull markets, although not synonymous, are inevitable in free markets. It’s the nature of the beach. And whenever they burst or correct, politicians cry foul and demand bigger and “better” regulation. It happened after the crash of ’29, it happened after the dot-com bubble, and it’s happening again.
And every time it happens, chest-thumping politicians claim they are sticking up for the average American, when in fact, most of the time, the new regulations are superfluous and useless. What’s more, the average American is usually worse off.
Apparently, we’re on that ride once again.