Patterico's Pontifications

6/16/2009

Obama Proposes New Financial Regulations

Filed under: Economics,Government,Obama — DRJ @ 6:15 pm



[Guest post by DRJ]

Reports indicate Barack Obama will announce tomorrow his newest plan to overhaul the financial sector and reduce financial risk. It will call for expanded capitalization and liquidity requirements for U.S. and international entities and reduced reliance on credit-rating agencies. (What will take their place? Government?)

The plan will also expand the powers of the Federal Reserve and add another layer of bureaucracy:

“But even as the Fed gains new powers, Obama also would transfer some banking authority that now rests with the Federal Reserve and the Treasury Department to the new consumer agency — the Consumer Financial Protection Agency.

“There is going to be streamlining, consolidation and additional overlap so that you don’t find people falling through the gaps, whether it’s the consumer protection side, the investor protection side, the systemic risk that we need to make sure is avoided,” Obama said Tuesday.”

No matter how many times Obama claims he wants to streamline government, creating a new government agency that provides “additional overlap” will not save costs or reduce bureaucracy.

Meanwhile, House Republicans pointed out that the Obama Administration’s continued expansion of government bureaucracy and spending “pose a far more significant source of ‘systemic risk’ to our nation’s economy than the failure of any specific financial institution.”

— DRJ

32 Responses to “Obama Proposes New Financial Regulations”

  1. the Consumer Financial Protection Agency

    Oh good grief.

    Paul (creator of "Staunch Brayer") (bcc87c)

  2. Eliminating the rating agencies is kinda like canning the IG: shoot the bearer of bad news and the problem will go away, right?

    And “additional overlap” as a form of “streamlining?” Now there’s an odd couple.

    Deliberate overlap is an old trick. Stalin loved it, for example; Saddam too; many many others, most of them not genocidal dictators, but all of them terrible at actually running anything. It forces underlings to go back to the boss constantly in order to resolve the constant and inevitable turf wars it creates. It appeals strongly to micro-managers for just that reason.

    ras (20bd5b)

  3. The ratings agencies could use something, but I doubt this will do it. How much is too much government?

    JD (09647a)

  4. The trick is for the government to figure out where Wall Street’s next Ponzi scheme bubble will be and pop it before it gets started.

    poon (093c46)

  5. When it all devolves into chaos, will the Left finally learn their lesson?
    Or, will it take a Pol Pot to reason with them?

    AD - RtR/OS! (b363ba)

  6. I wonder if the directors of the Consumer Financial Protection Agency will “overlap” with the directors of ACORN or the UAW.

    DRJ (180b67)

  7. You forgot the DNC overlap, DRJ.

    JD (1910a1)

  8. poon,

    There’s a fine line between a scheme and a brilliant idea, plus it’s difficult to stop a scheme before the fact.

    DRJ (180b67)

  9. Touche’, JD, but I know Obama won’t forget.

    DRJ (180b67)

  10. poon, the problem is that the Ponzi schemes that truly threaten the economic health of the country,
    have been a product of the Feds, not Wall Street:
    Social Security;
    Medicare;
    Fannie Mae & Freddy Mac;
    ObamaCare!

    AD - RtR/OS! (b363ba)

  11. Poon is proposing a psychic mind-reading thought-crime kind of government agency.

    JD (1910a1)

  12. In 2002, the Nobel-prize winning economist, Paul Krugman, writing in The New York Times, called for a housing bubble to be created, to solve our economic problems:

    “This was a prewar-style recession, a morning after brought on by irrational exuberance. To fight this recession the Fed needs more than a snapback; it needs soaring household spending to offset moribund business investment. And to do that, as Paul McCulley of Pimco put it, Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble.

    So Krugman called for an economic Ponzi scheme, and Greenspan provided the low interest rates that made it possible.

    Official Internet Data Office (eb7e58)

  13. DRJ,

    Anyone making more than 6% on a security backed by mortgages has to know they’re holding crap.

    It’s just simple math.

    I predict the next bubble will be created in some foreign asset class beyond the reach of our domestic regulators.

    poon (093c46)

  14. Oh, I think you missed the best thing:

    And the agency would have a mandate to increase the availability of financial products in lower-income and underserved communities, in part by enforcing the Community Reinvestment Act, which requires banks to make loans everywhere that they collect deposits.

    So. Require mortgages for lower-income people.
    That’s what’s going to drag us out of this subprime mess.

    MayBee (cca412)

  15. I didn’t see that in the early reports, MayBee. This is foolishness on top of foolishness.

    DRJ (180b67)

  16. poon,

    From the sound of his plan, very little will be beyond the reach of Obama’s regulators. Not only does it purport to control global entities, it’s already had an impact on British banks and last week Lloyds Bank told its American customers to take a hike.

    DRJ (180b67)

  17. The discussion here shows not only that the standard conservative critique of government overreach is well-founded and essential, but also that it functions best as a brake on the wheels of the state.

    Unfortunately for the American right, the ideological formula does not function very well as an engine of progress. In fact, it has shown itself to be disastrous.

    As a liberal, I would not like to see economic ideas of limited government crushed, though I am confident they will increasingly be relegated to theoretical status, if only because the movement itself insists on being defined that way. By that I mean its unwillingness to acknowledge the actual results of its leaders policies. Thus the defense of Bush becomes that he was foiled by liberals, never mind that 9/11 gave him a Fort Knox of political capital, while liberals wielded less formal and informal power than ever. (At least until the Iraq war metastasized into a full-blown political brain cancer, just in time for an economic meltdown.)

    To make a positive, progressive critique of increased government intervention, conservatives need to start from the point of acknowledging that laissez faire orthodoxy has failed. Without that acknowledgement, it is hard to imagine how they can fashion a cogent, relevant claim to superior responsibility.

    Note that not one of the 16 comments above — other than poon:s dissent — proposes any ideas whatsoever about an alternative to solving the very real, very urgent problems with the banking system and the economy. Again, not that the criticisms are not at least partly warranted …

    A democracy can thrive with a set of perma-critics like todays conservatives, who have no chance of taking control, but who can use their limited power as a check on the ruling factions excesses.

    Hollywood Gliberal (ebd101)

  18. poon had an idea? Who knew?

    But yes, you are right. When an overregulation does not work, the answer is, of course, more regulation. Ah, the brilliance of the liberal mind at work. Don’t understand something? No problem, we’ll fix it so OUR cronies can steal the people blind.

    Once you have ANY regulation, the argument of “laissez-faire orthodoxy” becomes a strawman. Becuase “laissez-faire” essentially mean the government keeps “hands off”.

    Dr. K (eca563)

  19. “Eliminating the rating agencies is kinda like canning the IG: shoot the bearer of bad news and the problem will go away, right?”

    The problem with the he ratings agencies is that they weren’t bearers of bad news.

    imdw (017d51)

  20. “I didn’t see that in the early reports, MayBee. This is foolishness on top of foolishness.”

    I see we’re still going to be riding on 1970’s laws for 2000’s problems. So desperate we are to be blaming poor people.

    imdw (017d51)

  21. Maybe imdw could explain to us how sub-prime loans were not a problem, and how the actions of community organizers like Teh One suing banks to force them to make more loans under the CRA was not a factor in the recent bubble bursting.

    JD (bd7f0f)

  22. The credit bubble was a problem, and it was across income, to include commercial real estate, prime borrowers, and subprime. If the CRA really does have the effect of forcing banks to make unprofitable loans, that would lessen the supply of credit, not increase it. If we passed a law that detroit had to sell more cars at a loss, that would lessen the supply of cars, not increase it.

    imdw (017d51)

  23. So, social justice and forced redistribution of available credit is a good thing?

    JD (bd7f0f)

  24. Fannie and Freddie had nothing to do with it as well.

    JD (bd7f0f)

  25. IMDW:“If we passed a law that detroit had to sell more cars at a loss, that would lessen the supply of cars…”

    One would think so, but Detroit has been selling cars at a loss for many a year, and yet it keeps on making them due to the terms of its union contracts and the CAFE regulations.

    The union contracts make Detroit pay workers even if they aren’t making anything (“job banks”) so Detroit has kept on making cars to keep workers working even when the product sells at a loss. Because the losses would be even higher if it didn’t.

    The “foreign” car makers (Toyota, Honda, etc.) just pay the CAFE fine and add it to their cars price, but Detroit keeps designing cars to try and meet the CAFE fleet mix and get saddled with products that are smaller, lighter, less safe, and undesired by the customer base.

    LarryD (243b3d)

  26. “The credit bubble was a problem, and it was across income, to include commercial real estate, prime borrowers, and subprime…”

    Absolute horse-shit!
    Upper-income borrowers were mainly affected in that they overextended themselves on 2nd-homes, boats (financed as 2nd-homes), and vacation properties.
    Commercial RE was not affected until the economy started to sour, and is reflecting its’ normal cycle in respect to the demand for commercial/industrial floor-space.
    Prime borrowers have not been a factor in the foreclosure market, except as buyers of distressed properties.
    The problem was, is, and will be, in the sub-prime market where the normal rules of commerce were subverted by the distortions of the CRA and manipulations of FM2 – all politically induced!
    Open your mind to the facts as they exist, not as you wish them to exist…Oops…
    That would require you to stop being a liberal sychophant, to use reason, and become a conservative.
    My Bad!

    AD - RtR/OS! (f52b58)

  27. Consumer Financial Protection Agency = Patronage Award Agency.

    Patricia (2183bb)

  28. Ahhhh, to remember the old days when the only irritant was paying into the Social Security “pyramid scheme”,knowing we wouldn’t see a dime came to collect.

    Now look at where we are.

    No longer does the word “billion” induce shock,awe and a mysterious sense that we cannot grasp how much in terms of money that a billion dollars is.

    Now we are well into the age of the “Trillion”.Without a doubt, when the word “Trillion” is linked and paired to the word “money”, it is at that point when this age, this time of a great nation and people is drawn to and end.
    Like it or not folks, we are winding down into the abyss of other great nations or civilizations that came before us.

    Ahhhh, to remember the old days when the only irritant was paying into the Social Security “pyramid scheme”,knowing we wouldn’t see a dime came to collect.

    Drider (b003e1)

  29. Hollywood Gliberal, you really don’t understand the issues here, do you?

    SPQR (72771e)

  30. SPQR – you don’t even know … you’re glib. Glib.

    JD (50d704)

  31. Yep, I’m sure Hollywood thinks that one went right over my head …

    SPQR (72771e)

  32. “Prime borrowers have not been a factor in the foreclosure market, except as buyers of distressed properties.”

    Would it be surprising if there were more prime foreclosures than subprime ones at some point? Just where do you get your wonderful wonderful facts?

    imdw (6d9df6)


Powered by WordPress.

Page loaded in: 0.3474 secs.