Posts Tagged ‘FinReg’

FinReg adds mountains of bureaucracy

July 23, 2010 Leave a comment

This is what “reform” looks like:

Before the financial reform law, the SEC already had a full plate. It is working to implement or finalize nearly 20 new regulations covering areas ranging from money market funds to high-speed electronic trading. It is also conducting numerous investigations growing out of the financial crisis and is in the early stages of implementing many internal reforms in its enforcement and examination divisions.

The agency’s new tasks are just as onerous. Schapiro said at a congressional hearing Tuesday that the SEC will have to hire 800 new employees.

“The act requires the SEC to promulgate a large number of new rules, create five new offices, and conduct multiple studies, many within one year,” Schapiro told Congress in prepared testimony. “The importance and complexity of the rules coupled both with their timing and high volume and the rule writing agenda currently pending will make the upcoming rule writing process both logistically challenging and extremely labor intensive.”

Do Democrats have solutions to any issue that doesn’t require tax increases or increased bureaucracy?

The idea that multiplying the number of bodies in a federal office, or legislating reams of new regulations on existing regulatory bodies, will prevent these crises from happening is insane.

But it does provide a sense of accountability, right?

The next time a market bubble bursts or there is some sort of financial crisis to deal with, we’ll know who to call.  Just look up the number of your nearest Democratic representative or Senator and ask them to fix the mess with the massive, new layers of regulation they just dumped onto the financial system.

On repealing FinReg

July 19, 2010 Leave a comment

John Boehner is calling for a repeal of the FinReg legislation passed by the Senate a few days ago.

Ramesh Ponnuru doesn’t think this is smart politics:

[…]I hope other Republicans don’t join this bandwagon.

While I don’t accept the conventional wisdom that repealing Obamacare is impossible, it is certainly going to be difficult. It is highly, highly unlikely that Republicans will be able to repeal two of the Democrats’ recent major pieces of legislation.

If Republicans promise to repeal several laws, they will reduce the likelihood that they will repeal any of them.

A few other points worth considering.

First, the financial-regulation bill isn’t as bad as the health-care legislation—it even has some good points. Second, the bill wasn’t passed in the manner the health-care bill was. No state re-wrote its laws to enable it to get a 60th vote, and public sentiment wasn’t against it.

For both of these reasons, I think it makes more sense for conservatives to try to modify the legislation in the future—replacing its worst parts, dealing with Fannie and Freddie, etc.—than to try to repeal it.

The merits (or lack thereof) of the FinReg legislation notwithstanding, I agree for the most part with Ponnuru’s assessment.  Having previously called for the reform of Obamacare, doing the same on FinReg makes the minority leader look shrill.  Politically, this will become an albatross for Republicans heading into the midterms and beyond, if they don’t learn to frame the debate as providing alternatives to the creeping statist policies of the left.

Republicans have to learn the fine art of playing politics, something they have failed to do despite gaining significant momentum over the past twenty months.

FinReg passes, bubble-less and crash-less markets await us all

July 16, 2010 Leave a comment

The Senate has passed FinReg by a vote of 60-39, with three Republican helping the Democrats.

The scope of the “reform” is staggering–a 2,000+ page bill, creating some 243 new bureaucratic offices.  Like most reform packages to come from Congress, it will hardly be a model of efficiency.

But perhaps the most alarming aspect is the broad, new powers it gives to existing regulators, regulators who should have been minding the store back in the 2000s, when the financial system was ready to implode.

When politicians begin to take notice of an issue, and start whining about “reform” and “action” to be taken, it’s usually too late, and is really just an indication that said politicians have no clue about what they are trying to do.

Such is the case with Wall Street reform.  Since the 1930s, with the establishment of the SEC and the creation of our modern financial regulatory state, politicians have deemed themselves the white knights and saviors of bubbles and crashes, wrought by “evil and greedy” Wall Street bankers.

And anyone who actually believes that this is the case, is being extremely ignorant:

This isn’t the first time Congress has expanded the Fed’s role. After the Great Depression, it passed the Employment Act in 1946, charging the Fed with averting the huge unemployment seen in the 1930s. After the double-digit inflation of the 1970s, the Fed was formally given a dual mandate of promoting both price stability and maximum sustainable employment. In the wake of the latest financial crisis, the Fed is effectively being told to add the maintenance of financial stability to its responsibilities.

The risks, however, are that the Fed still won’t be able to prevent another crisis, and that it will be an even clearer target for blame if that occurs. “The bill has good intentions, but I’m worried about its implementation. If I were the Fed, I’d be seriously worried about being left holding the bag,” said Anil Kashyap, a professor at the University of Chicago’s Booth School of Business.

As long as there are free markets, and market participants free to engage in those markets, there will be bubbles and crashes, peaks and troughs–such is the nature of the system.

The problem is and never was lack of regulation–the banking industry is one of the most heavily regulated in the country.  It comes down to who is doing the regulating.

When you see Dodd, Frank, Reid, Pelosi, and all the rest up there patting themselves on the back for passing yet more “reform” of the industry, ask yourselves who is the real problem here.

FinReg bill just a ruse. Really.

June 27, 2010 Leave a comment

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.

FinReg passes with help from Senator Brown

May 21, 2010 Leave a comment

Caveat emptor:

Sen. Scott Brown (R-Mass.) said Thursday that he flipped his vote on the financial regulatory overhaul because of assurances he received from Senate Majority Leader Harry Reid (D-Nev.).

Brown on Wednesday voted against cloture to move to a final vote on the bill, saying that he had reservations with the flawed bill. The motion failed, which upset Reid.

But on Thursday, Brown said he received enough guarantees from Reid to feel confident about crossing the aisle.

“I supported moving the financial bill forward today because I received assurances from Senator Reid and his leadership team that the issues related to Massachusetts in the financial reform bill will be fixed before it is signed into law,” he said in a statement. “We are still working to ensure these commitments are fulfilled prior to a final vote.”

You just have to laugh.  Maybe it’s just the greenness of being a first term senator, but seriously man….Harry Reid?

The consensus on FinReg seems to be that it’s a toothless “reform” bill, a bill passed just so Democrats and the President can say they “did something” on reforming the financial industry while campaigning for the midterms.

But the merits of the bill notwithstanding……Harry Reid?  You took “assurances” from Harry Reid?  Maybe it’s just that he’s a rookie senator.  Or maybe he’s trying to flex his bipartisanship muscles for the constituents back in the Massachussets.  I can’t tell for sure.

But I do know that taking any sort of promise from Harry Reid will not end very well.

UPDATE. It’s getting clearer now:

So why did Brown buckle, after voting to uphold the filibuster on Wednesday?

For starters, he received 3,000 phone calls to his office over the last week, all of them by supporters of Organizing for America, the apparatus that sprung out of President Obama’s campaign for the White House that is now housed inside the Democratic National Committee.

Brown received around 900 calls on Thursday alone, a DNC source said.

Then there is guilt. Reid all but called Brown out by name on Wednesday when he said that the Senate did not move forward on a procedural vote to end debate and overcome the filibuster because a senator had “broken his word.”

So Senator Brown, who campaigned as a rebel-in-a-blue-state type, hero of the resurgent conservative movement, who promised he would stand up to the statist agenda of the Democratic majority in Washington, is easily led around by the nose by said Democratic party.  Lovely.

As I noted in the original post, perhaps this is to be expected from a Republican from the Bay State.

Allahpundit ponders the same, which leads to an interesting, if not unwelcome, question:

The left knew they could make things uncomfortable for him in Massachusetts if he didn’t cave, so they turned the screws — and he caved. Which, admittedly, was fully expected after the first filibuster, but is no less depressing for having been predictable.

Exit question: Forgivable offense for a blue-state Republican worried about reelection or primary-worthy sin that’ll have Red State pounding the table tomorrow?

This is the last thing the Republicans need right now.