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Obama’s Financial Regulatory ‘Change’ Spells Disaster
The proposal is an anti-free market prescription for choking off capital and entrepreneurship.
President Obama proposed sweeping regulatory change in the financial system yesterday. Some questions must be asked:
1. Does the proposal make the U.S. economy impervious to bubbles and busts?
2. Does it make capital markets run more efficiently so that the invisible hand can prevent market bubbles?
3. Does it take pressure off the taxpayer?
4. Does it prevent moral hazard?
The answer to all four is a resounding “no.” Obama simply has expanded the role of government into the marketplace, without protecting anyone.
This proposal will cost you money.
Recall that it was the financial industry’s reaction to government policy that created the bubble. The Federal Reserve left interest rates extremely low for too long a time, while the House Financial Services Committee and the Senate Banking Committee failed to supervise Fannie Mae and Freddie Mac. Other regulators in the U.S. government simply didn’t do their stated jobs. This financial panic sits at the foot of government, not at the foot of Wall Street. There are many targets for finger-pointing, but the seeds of the bubble were planted by federal policy.
Yet Obama’s proposal vastly expands the interference of government, increasing regulation of financial firms!
Recent stress tests gave the financial marketplace very little information as to the health of the firms. The standards set by the Treasury were so low, and in some cases so unrealistic, that the tests themselves were meaningless. Yet Obama proposes more stress tests at the government’s whim — creating anxiety for shareholders and more costs for the business.
He places a lot of power with the Federal Reserve to police the marketplace. The Fed doesn’t have the knowledge or firepower to accomplish this task, nor is it the proper role of the Fed as the policing creates too many conflicts of interest.
Obama looks to regulate hedge funds, private pools of capital that only the wealthiest investors can be a part of. Hedge funds are not like mutual funds and should be left alone.
Obama wishes to regulate bank compensation. This will restrict banks from bidding for the best and brightest personnel. Who would you rather deal with, the post office or FedEx?
Instead of privatizing Fannie and Freddie, Obama hands them to the Treasury and Housing and Urban Development. What will happen here? Fannie and Freddie will become public utilities, politically run, and then make political and populist loans. Another disaster waiting to happen.
With regard to financial markets, Obama does very little to alter the existing playing field. Instead, he presents vague verbiage to be interpreted at anyone’s whim: ” … strengthens laws to prevent ‘unsophisticated parties’ from trading derivatives.”
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Jeffrey Carter is a former member of the Board of Directors of the Chicago Mercantile Exchange, and has been a “speculator” — independent trader — since 1988. He holds an MBA from the University of Chicago.
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12 Comments
1. cedarhill:The new agency will simply force lending institutions to make more “affordable” loans. But why worry, your grandkids are paying for all this anyway, just go back worshipping Obama as God.
Jun 19, 2009 - 4:40 am 2. RE:“Eveything within the state, nothing outside the state” – B. Mussolini
Jun 19, 2009 - 5:13 am 3. Sebastian Shaw:President Obama’s War on Capitalism & Freedom continues as he attempts to grow his executive power beyond the bonds of the Constitution; he must be stopped. The power hungry narcissist must be reigned in.
Obama’s popularity is waning while his plans meet stiff opposition now within Congress since they must run next year.
The One is on a time limit before the Giant awakes.
Jun 19, 2009 - 7:10 am 4. USAF Vet Dan:The question is: are these detrimental actions the result from ineptitude or intention? If it is the latter, then we have a repeat (on steroids) of what happened during the Great Depression… economic hardship creating fear and pain so the People will blindly accept exponential growth of government and a migration away from our Constitutional Republic to a Corporatist Oligarchy.
While Obama may be the current instrument of delivery, the roots of this insidious strategy goes back decades. Our federal government has been commandeered by the corporate / financial / banking Elite. We are witnessing a consolidation and expansion of power… a merger of sorts between the Elite and the government they control.
Jun 19, 2009 - 8:14 am 5. George F. Carter:The Obama administration has not properly make an effort to cure the credit crisis. It was the US Congress that gave anyone with a signature the right to credit provided by Fannie Mae and Freddie Mac. The US Congress gave credit to anyone regardless of ability to pay off their financial responsibilities. Congress has made no apology for their ruining our economy. In fact, Congress is passing earmarks, pork projects and doing all they can to make sure the American public thinks all this trillion dollar spending is designed to take care of the toxic real estate loans Congress gave. Unfortunately, the Democrats have spent and spent and spent and
Jun 19, 2009 - 12:48 pm 6. Berlet98:the toxic credit problem is just as bad today as it was in 2006 when the Democrats found ways to blame former our Republican President for any and everything. It is the legislators that are to blame for everything. All they seem to want to do is spend, spend, spend.
When we talk of the “people”, it ought to be all of the caucasians that get considerations. It seems the illegals get more free benefits than those that earned social security. I know I had to pay 20% down to buy my first house. There is no excuse for letting people pay less than 20% down because they can not afford it. When the federal, state and other government bodies pay to support those financially unable to support themselves, more and more people are born to those families. This guarantees a permanent financially dependent population that does not earn an education or work ethic to be independent. It may sound cruel but look at the number of those forced on the federal, state and other governments being bused to march for more financial gifts from those of us that must earn our own finances. We need CHANGE. It is time for the families to support their family members that need financial support. It ought not be a government financed responsibility to take care of all illegals or all those that are born into families that can not afford to support them. We need to CHANGE TO DO IT FOR YOURSELF.
“Disaster” is mild: We the People Are Getting Screwed!
This 6+ minute YouTube video is a relative oldie–as in 2 or 3 months–but still very much a goody.
It deals with the ongoing D.C., American, Obamian fiscal disaster although, oddly, it gives Obama a free ride on our economic trainwreck. What’s most chilling is that it pre-dated some of the more recent Washington fiscal madnesses.
In other words, things are much worse in mid-June than they were 3 months ago.
Entitled, “We the People Stimulus Package,” it’s worth a look and a re-look.
Watch it, hear it, and weep. After weeping, Do Something About it!
It arrived as an email with this note:
“This guy’s video on youtube has been so popular that Obama
called him personally. He said that he was very disturbed with the video and invited him to the White House. Obama also said he wanted the White House to handle the Press and not to talk about the video or the White House visit.
That’s interesting.
Watch it now. This may be the best six minutes invested in
your future
You may have to turn your Sound Control up some.
http://www.youtube.com/watch?v=jeYscnFpEyA
Jun 19, 2009 - 2:50 pm 7. Cybergeezer:Obama is synonymous with disaster; What’s the mystery?
Jun 19, 2009 - 3:25 pm 8. TomF:No, Duh.
Jun 19, 2009 - 9:13 pm 9. Marc Malone:FDR did similar things. I think it was 1936 when things started to get better, that FDR worried aloud that the economy might recover before all his changes had been enacted. Some changes followed, which made things worse, which in turn, allowed him to enact more changes to “handle the crisis”.
Idiots kept voting for this Socialistic fool, because they liked him. He had his fireside chats, and they liked that he talked to them (and indoctrinated them). Obama is trying the same thing… constantly communicating. It would work again, but for the blogosphere and Fox News.
Jun 19, 2009 - 11:17 pm 10. o'connor, M.A.:stop Obama now. He is a diaster for U S. What can be done?
Jun 20, 2009 - 8:49 am 11. Winghunter:Don’t treat the symptom, deal with the cause;
The Blame Game by Thomas Sowell ( Article, not his new book of the same subject “The Housing Boom and Bust”. )
http://townhall.com/columnists/ThomasSowell/2009/05/13/the_blame_game
Why the Mortgage Crisis Happened By M. Jay Wells from American Thinker ( Top Notch Website! )http://www.americanthinker.com/2008/10/what_really_happened_in_the_mo.html
Jun 21, 2009 - 8:02 am 12. Steve:I knew as soon as the election results came in that it would not be long before I became unemployed which happened at the end of March of this year, the job I was on 15 story condominiums and retail space was winding down, and when asked if I were willing to travel to North Carolina to work on a hospital that was behind I agreed and left Feb 4 and left at the end of the next month with a layoff slip.
My nephew is a supervisor with the company that I worked for and only office personnel and supervisors are still working with limited hours due to warranty issues on various projects. I have called the shop and so far nothing is going on, even though my nephew needs help the office does not see the benefit in hiring at this time.
Projects that our company had won bids on right after the election were either canceled outright, or placed on hold as they still are if not canceled also. I have been in my field for 36 plus years and have never seen it this bad for construction. I understand that under Jimmy Carter in the 1970’s that it was bad but at the time I was in the U.S. Navy so it did not affect me as I got out of the service in the last half year of his awful presidency and collected unemployment as well as the GI bill while attending college. Something give me the bad impression that this is going to end up worse than Carter and we all know what happened with him!
Voter out all democrats and liberal republicans (at least Spector is already gone). I understand this might seem like a dream but something has to replace the nightmare that this country is currently going through.
Jun 21, 2009 - 10:32 am