Quote :

"The Lawyers and Lobbyists Full Employment Act With the single stroke of a pen, President Barack Obama signed the Dodd-Frank financial regulation bill that set in motion 243 new formal rule-makings by 11 different federal agencies. Each of the 243 rule-makings will employ hundreds of banking lobbyists as they try to shape what the final actual laws will look like. And when the rules are finally written, thousands of lawyers will bill millions of hours as the richest incumbent financial firms that caused the last crisis figure out how to game the new system University of Massachusetts political science professor Thomas Ferguson tells The Christian Science Monitor: "By delegating so much to the regulators, Congress is inviting everyone interested in the outcome to make more campaign contributions, as they intervene in the regulatory process to influence the regulators. Nothing is settled. It’s a gold mine for members of Congress." So if the richest big banks, lawyers, lobbyists and Congress were the big winners yesterday, who are the losers? Small banks, entrepreneurs and you. Smaller community banks do not have the same resources that the Goldman Sachs of the world do to hire armies of lawyers and lobbyists to shape and comply with new regulations. The cost of compliance will eat up a much larger share of small bank revenue. Jim MacPhee, CEO of Kalamazoo County State Bank in Michigan and chairman of the Independent Community Bankers of America (ICBA), told USA Today: “We weren’t part of the subprime (mortgage) meltdown. Why throw more regulations at us?”"

"He has erected a multitude of New Offices, and sent hither swarms of Officers to harass our people, and eat out their substance" -- Declaration of Independence

http://blog.heritage.org/2010/07/16/morning-bell-the-lawyers-and-lobbyists-full-employment-act/

7/16/2010 10:47:45 AM

I'll say it so someone else doesn't have to: "...but lack of regulation is what got us into this mess, therefore all new regulations and laws are good."

Is anyone surprised that a full Federal Reserve audit didn't make into the final bill? When I talk about a banking cartel in this country, I'm not exaggerating. It really exists. The banks borrow money for virtually free from the Fed, then make money on it by either loaning it out or buying treasuries. It really is a scam, and the political establishment is working hard to make sure no one pays attention to it.

7/16/2010 11:26:39 AM

No, stupid people got us into this mess. Its not the government's job to protect us from every little thing. The country would be a much better place if the government didn't have a knee jerk reaction every time we go through an economic cycle.

7/16/2010 9:36:16 PM

The government is largely responsible for the boom bust cycle.

I'd like to hear some people defend this bill. It was voted for on purely partisan lines. The Federal Reserve is given more power with this. Banks that had nothing to do with subprime are now going to have to spend millions to comply with the new regulations. Small banks probably will have a hard time doing it. The too big to fails shouldn't have a problem hiring some new people on the taxpayer's dime, though.

7/17/2010 10:51:50 AM

^ i haven’t read much about this bill yet, but what costly regulations are you referring to?

7/17/2010 11:02:58 AM

^ are you serious?

7/17/2010 3:15:20 PM

^Death to America

7/17/2010 3:35:59 PM

“I would say that nothing in this bill would have prevented the previous crisis — the one we are working our way through right now,” said William Isaac, former chairman of the Federal Deposit Insurance Corp. "And it clearly won't prevent the next crisis."

But it will take years before the impact of the law is known. That’s because most of the specific regulations have yet to be written.

“The devil is in the details: There are a lot of unanswered question that were thrown to regulators," said Jay Brown, a professor of corporate and securities law at the University of Denver. “The reason it was thrown to regulators is because there are no answers. So for example: What’s too big to fail? Nobody knows the answer to that.”

Under the new law, banks and other financial institutions will be overseen by a council of regulators. That group will be charged with identifying the kinds of “systemic” risks that spun out of control in the collapse of Bear Stearns and Lehman Bros. in the financial panic of September 2008.

But there’s little to be gained by entrusting that task to the same regulators who failed to spot the causes of the panic the first time, said Isaac, the former FDIC head.

“If a bank went to the regulators and said, ‘We’ve got a good idea: we’re going to put our lending officers in charge of risk management,’ that bank would be put out of its misery immediately,” said Isaac. “That’s what the government just did. It put the regulators in charge of assessing their own performance. It’s a very bad system.”

The new law also sets up different rules for big banks—those with more than $10 billion in assets—and the rest of the industry. That means a handful of banks will continue to enjoy “too big to fail” status—complete with an implicit government guarantee that lowers their borrowing costs and gives then a competitive edge, according to Hurley.

“It enshrines for the foreseeable future that there are two parts of the financial system,” he said. “There are the six largest banks, which account for about 60 percent of the financial system, and then there is everybody else, from regional banks down to credit unions. The top six get a subsidy in the form of lower borrowing costs. And everybody else pays for it.”
http://reason.com/blog/2010/07/16/financial-reform-will-definite

7/17/2010 6:19:30 PM

Nothing in this bill will prevent a recession. It is just a feeding frenzy for lobbyists, lawyers and politicians.

Just like the $800 billion gov't pork bill was sold as a "stimulus" package, this massive bone thrown to lawyers and unions is being sold as "Economic Reform"

7/18/2010 12:29:04 AM

I quit reading here:

Quote :

"tells The Christian Science Monitor"

7/18/2010 12:21:09 PM

the heritage.org should have been more concerning.

christian science monitor is a fairly decent source often.

7/18/2010 12:26:35 PM

Quote :

"i haven’t read much about this bill yet, but what costly regulations are you referring to?"

Financial institutions already have to spend a shit ton on employees that do nothing at all except comply with regulations. Add more regulations, and it'll become a bigger job.

7/18/2010 12:40:30 PM

wheres the part of the bill where they say what money is going to unions and lawyers?

7/18/2010 3:15:39 PM

Quote :

"the heritage.org should have been more concerning."

didn't make it that far

7/18/2010 6:33:38 PM

if ignorance was bliss, you'd be having an orgasm right now

seriously, even NPR said effectively what that blog post was saying: that no regulations have actually been written yet. I wish I could pass a bill that says "we'll make the rules up later, k? oh, and they'll be binding." seriously, that is disturbing beyond belief

7/18/2010 7:41:43 PM

Quote :

" Ford Motor Co.’s financing arm pulled plans to issue new debt, the first casualty of a bond market thrown into turmoil by the financial overhaul signed into law Wednesday. Market participants said the auto maker pulled a recent deal, backed by packages of auto loans, because it was unable to use credit ratings in its offering documents, a legal requirement for such sales. The company declined to comment. The nation’s dominant ratings firms have in recent days refused to allow their ratings to be used in bond registration statements. The firms, including Moody’s Investors Service, Standard & Poor’s and Fitch Ratings, fear they will be exposed to new liability created by the Dodd-Frank law. The law says that the ratings firms can be held legally liable for the quality of their ratings. In response, the firms yanked their consent to use the ratings, hoping for a reprieve from the Securities and Exchange Commission or Congress. The trouble is that asset-backed bonds are required by law to include ratings in official documents. The result has been a shutdown of the market for asset-backed securities, a $1.4 trillion market that only recently clawed its way back to health after being nearly shuttered by the financial crisis."

http://online.wsj.com/article/SB10001424052748703954804575381644138678302.html

7/22/2010 10:32:04 PM

^ Seems like a good thing.

7/22/2010 10:34:00 PM

yeah. I mean, when we have trouble with getting lending going again so businesses can grow, we should definitely make it so that banks don't want to lend!

7/22/2010 11:02:17 PM

^ So what are you saying, the rating agencies are too big to fail?

Quote :

"The result has been a shutdown of the market for asset-backed securities, a $1.4 trillion market that only recently clawed its way back to health after being nearly shuttered by the financial crisis." "

It's likely without the massive gov. bank bailout, these guys would have gone under, if they were teetering with the assistance to their industry. Not to mention they probably SHOULD have gone under.

Now they are forced to actually make sure their products aren't crap, and you're shedding tears for them?

You're lamenting this temporary bump in the lending systems, when the alternative you argue for (no help at all) would have resulted in cascading failures of businesses that would require an even longer, more painful adjustment period.

So what is your issue here? That businesses known for shilling worthless products are forced to reevaulate this practice? That the adjustment period to the drawdown of the sale of these products isn't as long or painful as it could be?

7/22/2010 11:48:17 PM

moron, I don't know who you think the bailed out party is. Ford motor company is, as far as I know, a good investment. There are people lining up to lend money to Ford. If you are hating on the ratings agencies, you are right to do so, they are a de-facto government run industry that fucked up royally. The market solution would have been to discredit them and for them to go away, leaving investors to choose safe bets on their own or with the help of more trusted institutions.

Now, you agree the rating agencies are bunk, so why are you defending a law requiring their approval before entities, far more credible than they, are allowed to borrow?

The planners have fucked up again. The correct solution was to de-regulate the rating business. Instead, the government tried to beef them up into government run creditor insurance agencies. Even if the parties had figured out how to price such a service, it would have been even more prone to blowing up than the previous government run rating system.

7/23/2010 12:30:41 AM

^ It seems to me like most things, the government only did this half assed.

1) Requiring that rating companies be liable for their ratings = Good (especially so if these are mandated by the government, as that instills a further degree of trust)

2) Requiring that lenders have to provide documentation from ratings companies = Bad.

3) No liability for the government for requiring documentation from a bad ratings company = Bad

The ideal way to fix this would be to fix issue 2 as issue 3 is just a path laden with pitfalls.

7/23/2010 1:04:21 PM

Quote :

" Fannie and Freddie have liabilities in excess of $5 trillion. They have already directly cost taxpayers nearly $150 billion, with no end in sight. Most of the banks bailed out in the fall of 2008 have gotten back on their feet and many have paid back, or started to pay back, the money provided to recapitalize them at the height of the panic. Not so Fan and Fred. They continue to bleed money, and each quarter brings new losses and new demands on their unlimited line of credit with the federal government, which is to say the American taxpayer. And yet these facts are ignored—not just by Congress or the administration, but by the press and much of the public. Meanwhile, Fannie and Freddie, failures that they are, have become more central than ever to America's mortgage industry. They underwrite the vast majority of all new home loans, and they own or guarantee about half of all the mortgages outstanding. Our banking system never was nationalized in the crisis, as some urged at the time. But mortgage finance has been, or nearly so, with nary a whisper of debate or protest."

http://online.wsj.com/article/SB10001424052748703467304575383451809694546.html?mod=djemEditorialPage_h

7/27/2010 6:51:11 PM

^
It shows Obama's mind-set that this finance bill mainly went after the private sector...ignoring the two main culprits Fannie and Freddie. After all, it was their guarantees- combined with the democrats' edict to have everyone own a home- that got us into this recession.

7/28/2010 10:38:55 AM

It was lack of regulation and free market capitalism, damn it. The Fed, government backed loans, and Congress are all completely blameless. The only way to prevent another crisis is to punish the firms that had nothing to do with causing it, while also padding the pockets of the power elite. Apparently you're not familiar with how the new regime operates.

7/28/2010 11:17:15 AM

Quote :

"combined with the democrats' edict to have everyone own a home"

That's not the "democrats' edict" thats a value deeply ingrained inside the american culture.

7/28/2010 12:43:44 PM

both parties get value out of putting people in homes because its a short term gain (votes) and they're betting someone else will be caught holding the bag when it goes ugly. This shit started decades ago and its just now getting public attention. credit should not be available at all to people who cant afford it.

7/28/2010 1:16:18 PM

Quote :

"That's not the "democrats' edict" thats a value deeply ingrained inside the american culture."

No, it really isn't. Homes cost a lot of money. Not everyone should own a home. Perhaps we should strive to have economic conditions where everyone can save money and one day purchase a home, but not everyone is currently in that position, nor will they ever be. For some people, it's better that they rent, perhaps with 2 or more roommates.

We shouldn't be trying to mandate a certain standard of living through legislation. Economies grow because of underconsumption; people make sacrifices so they can live more comfortably later. Our current financial and monetary system discourages savings at every turn, which is one of the biggest problems we have. Spending may be an indicator of a strong economy, but we can't just crank up spending and think that will result in a strong economy.

7/28/2010 4:24:28 PM

Quote :

"We shouldn't be trying to mandate a certain standard of living through legislation."

Then why aren't you arguing against the tax breaks for home and land owners? They have much more to do with this.

Quote :

"Economies grow because of underconsumption"

Economies grow most when there is the correct amount of consumption, that's the only way it can accurately price.

7/28/2010 5:10:58 PM

Quote :

" Under a little-noticed provision of the recently passed financial-reform legislation, the Securities and Exchange Commission no longer has to comply with virtually all requests for information releases from the public, including those filed under the Freedom of Information Act. The law, signed last week by President Obama, exempts the SEC from disclosing records or information derived from “surveillance, risk assessments, or other regulatory and oversight activities.” Given that the SEC is a regulatory body, the provision covers almost every action by the agency, lawyers say. Congress and federal agencies can request information, but the public cannot. That argument comes despite the President saying that one of the cornerstones of the sweeping new legislation was more transparent financial markets. Indeed, in touting the new law, Obama specifically said it would “increase transparency in financial dealings.”"

7/28/2010 5:27:19 PM

Quote :

"Then why aren't you arguing against the tax breaks for home and land owners? They have much more to do with this."

I am arguing against those tax breaks. They wrongly encourage people to borrow money from the bank to purchase a house, when those people don't really need that kind of burden.

Quote :

"Economies grow most when there is the correct amount of consumption, that's the only way it can accurately price."

The correct amount? Determined by who? If everyone used all of their extra income for consumption, there would be no production. Production only comes about when people underconsume (save), which allows those people to invest in capital.

7/29/2010 11:08:16 AM

Prices adjust to ensure a correct amount of consumption. Prices also adjust to ensure a correct amount of investment. This is only not true for one resource because no amount of price adjustment can ever produce any more, and that is U.S. dollars, because their scarcity is purely artificial.

7/29/2010 11:44:08 AM

Quote :

"I am arguing against those tax breaks. They wrongly encourage people to borrow money from the bank to purchase a house, when those people don't really need that kind of burden."

The democrats had little to do with those tax breaks. They've been there a long time.

Quote :

"The correct amount? Determined by who?"

Do you really need me to explain accurate pricing? It's that little dot in the middle where supply meets demand.

Quote :

"Production only comes about when people underconsume (save), which allows those people to invest in capital."

The tail is wagging the dog in that scenario. People will always save when there is money to be made and risk is low enough.

7/29/2010 12:48:46 PM

7/30/2010 11:26:44 PM