Friday, May 21, 2010

Three Things About the Financial Reform Bill That Don't Make Sense


By now, we all know that last night the Senate passed their version of the financial reform bill that was mightily hated and fought by corporations, their swarm of lobbyists and the US Chamber of Commerce. I guess we should thank whatever God we pray to for small favors that it didn't drag on as long and as bitterly as the health care debate. In fact, a comprehensive bill may be on President Obama's desk as early as Monday next week.

And while it's certainly a good thing that Congress ultimately resisted the forces of darkness, there are three major issues I have with the bill. I never had any illusions that this "sweeping" "reform" bill would either be sweeping or benefiting from any actual reformist zeal but I just want to have three things clarified for me:

1) If the cost of regulating risks will make too "expensive" for banks to comply with the added oversight and if they pass these additional expenses onto their account holders, then how is this real regulatory reform? Isn't protecting Joe Accountholder from rapacious banks the main impetus for drafting such reform, in the first place?

2) Regulating interchange fees may or not prove to be a good idea in the long run. Yet if debit card holders like me (although I use a community bank, which isn't the concern of the bill) find fewer places where their cards will be accepted, in theory this could lead to bigger headaches than not being able to pay with the plastic. If more people are forced to withhold liquid capital from their banks and keeping more of their cash to themselves to make purchases that used to be made with debit cards, doesn't that hurt banks in the long run and wouldn't they, once again, be forced to retaliate by hiking fees and surcharges to make up for this shortfall in liquid capital?

3) If Freddie Mac and Fannie Mae are still owned lock, stock and barrel by the federal government, then why are they exempt from oversight from Uncle Sam? You'd think this would be the perfect time to keep an eye on these troublesome twins to ensure they've learned their lesson.

Even the most cynical of us have to concede that this bill could've been a lot worse. Think of the Bankruptcy bill of 2005, for instance, another product of hideously misplaced and badly-aimed zeal. Forming a consumer protection agency, something bitterly fought by the US Chamber of Commerce is, in theory, a good thing for US consumers. Hopefully, it won't be underfunded or neglected when no one's looking so banks will continue making usurious, predatory loans to unwary home buyers that can then be bundled and profitably sold as toxic assets by other predators such as Goldman Sachs.

Going back to the regulatory risks aspect of the bill: One thing I do like is the creation of a $150,000,000,000 slush fund to help bail out "distressed" banks. Why shouldn't they pay for their own bailouts instead of passing the buck, or 700 billion of them, to the taxpayer? And if they try to make up for that shortfall by jacking up fees and surcharges or lowering interest rates on interest-bearing accounts, there's always the option of amending the bill.

6 Comments:

At May 22, 2010 at 10:13 AM, Anonymous Comrade Rutherford said...

Fannie and Freddie used to be great - when they were both not-for-profit organizations! They onyl got into trouble when they were converted into for-profit companies and handed over to Bush cronies for them to loot.

Same thing with America's insurance companies. These abhorrent practices only started after they were allowed to change from not-for-profits to greedy for-profits.

I say use the power of the Department of Commerce and forcibly convert every single health insurance company back into the benign not-for-profit companies they are supposed to be. Same thing with Freddie and Fannie, turn them back into not-for-profits and put some logic-minded Liberals in control of them.

 
At May 22, 2010 at 2:29 PM, Blogger Rusty Shackleford said...

Amazing,Bush gets blamed for Fannie and Freddie. Why is it you people never mention the butt pirate Barney Frank and his invovlment in that mess.Dont revise history,it was the dems who had the bright idea of giving mortgages to low income people who had no business getting one thus sparking the crisis.
Does the truth really hurt you people that much?

 
At May 22, 2010 at 4:31 PM, Blogger jurassicpork said...

From the junk drawer of your Dad's toolchest: Another wingnut heard from.

 
At May 23, 2010 at 4:26 PM, Blogger Rusty Shackleford said...

Typical code pink response.Throw a rock at the messenger when he's speaking the truth.Will you people ever realize how stupid you look?

 
At May 23, 2010 at 4:48 PM, Blogger jurassicpork said...

It wasn't the Democrats' idea to give mortgages to low income people so they could then see their APRs and mortgages literally double within the first 15 months of home ownership and see them get foreclosed upon.

Their mistake was in trusting that places like Freddie Mac and Fannie Mae and the banks with whom they made these loans would treat these people fairly and squarely. After all, the "Ownership Society" was Bushie's mantra. Who could blame these firsttime buyers for wanting a piece of the American dream?

Yeah, Bush called for more oversight of Mac and Mae but it wasn't exactly his signature issue. Illegally invading Iraq and Afghanistan was, as well as tax cuts, rolling up a huge deficit, spying on US citizens and putting Social Security on the casino gaming tables of Wall Street.

Who's revising what? However misguided the Dems were, their hearts were in the right places. Same thing can't be said for your beloved GOP that hasn't done shit for you or the mortgage lenders who partly wrote the bankruptcy bill that your chosen party shoehorned into law back in 2005.

Dick Durbin, a Democrat, tried to introduce a bill that would've given limited relief to homeowners and you have your beloved GOP and the lobbyists to whom they subcontract to thank for scuttling even that modicum of relief for homeowners about to lose their houses.

 
At May 24, 2010 at 1:52 AM, Blogger Rusty Shackleford said...

Ahhh,the dems hearts were in the right place. Now that makes their major cluster fuck just peachy keen.Hearts in the right place....yea,thats the ticket.Typical....so damn typical.

 

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