Archive for the ‘Editorial’ Category

Published on TheHill.com on April 27, 2010

The Republican Party is showing some starch by standing up to Harry Reid on the financial regulation bill. We can only hope they keep it up.

The Obama administration is selling a bill of goods inside the Beltway by saying that the GOP is getting into bed with the worst of Wall Street by opposing its bill. The truth is that the rest of the country fears big government a lot more than they fear big business and recognizes that Goldman Sachs and the other Wall Street giants feed at the Democratic trough as much or more than at the Republican one.

Republicans just need to keep pointing out that Goldman was the biggest donor to the Obama campaign, contributing $970,000 from its employees and PACs. (The combined donations of the staff and faculty of the University of California totaled $1.5 million, but they are hardly a coherent corporate entity like Goldman).

The financial regulation bill is a disaster in three major respects:

1. It gives incentives for irresponsibility by, in effect, guaranteeing banks’ survival by establishing a $50 billion rescue fund. In doing so, it gives the large banks a huge advantage and extends to them the same kind of implicit guarantee that once encouraged the likes of Freddie Mac and Fannie Mae to go on their lending spree. It is a key step in the conversion of big banks into quasi-public institutions, ultimately controlled by the government, levers through which the public sector can control the private.

2. By vesting the secretary of the Treasury with the power to seize — in a hostile takeover — any financial institution he deems too big to fail, it puts at risk of public takeover every such company in the nation. Granted, the FDIC now has the power to seize any bank. But the FDIC is headed by a nonpartisan board with a heritage of nonpolitical regulation. The secretary of the Treasury is an arm of the president. If a political appointee has the power to take over any financial institution — bank or non-bank — fire the board, replace the management, wipe out stock equity and sell off pieces of the company, it gives him a power that is so awesome it can undermine our democratic freedoms. What corporate executive will feel free to donate to Obama’s opponents or to speak out against the administration when doing so could cost him his job and his bank?

3. The newly established Consumer Financial Protection Agency will have the power to approve or reject any loan instrument offered by any company in the land. A mattress company that wants to let customers go 60 days before paying will have to get CFPA approval before extending credit. The bureaucratic bottleneck will slow economic activity, encourage corruption and retard consumer spending. It will be big government at its worst.

The entire political premise of the Obama administration’s efforts to pass this bill is flawed: Republicans will not be blamed for protecting the banks if they vote down this bill. Voters will not believe that the GOP is in cahoots with Wall Street. They will understand that the Republicans in Congress protected them from the massive growth of government.

Obama’s power-grabs have been so frequent and so blatant that he has no credibility on this subject. Voters expect him to be fighting to grow government and to be hostile to private enterprise. And they are wise to his close connection with Wall Street despite his occasional forays into populism.

This is a bill the Republican Party can kill with political impunity, and hopefully they will have the courage to do so.

The current administration is determined to instigate Financial Reform against the “evil” banks and Wall Street, What is suspicious is their real motive, and their redefinition of the word “reform” to mean “control”. By not wanting a crisis to go to waste, they are attempting to gain control over our capital and financial system for their purposes without fixing the real problems of “The Great Recession”.

To start, we need to examine the causes of the current economic crises; in the Fall of 2007 our economy was in a sustained growth period with low unemployment, and with the “surge” the Iraqi War was looking winnable! Then partisan politics kicked in. The political schemers knowing that they couldn’t use the war to gain the US Presidency decided to use the “1992 model” and use the economy as the main issue. A campaign using a chorus of unison talking points was started to jawbone how bad the economy was. This began the erosion of consumer confidence during the holiday season and the economy began to stall. The economy tightened due to uncertainty. Then the effects of the “Sub Prime” or “Junk” mortgages forced upon the banks under the “Community Reinvestment Act” hit and the downward spin began. This cascade increased. slowing the economy, slowing consumer purchases, slowing production, and slowing real estate sales, The people with “balloon payment” mortgages could not refinance their loans, causing defaults and foreclosures. With all this bad paper being sold upwards and accumulated in the big banks, the capital holdings of these big banks became questionable and the bank funds froze, credit halted, choking off funding to industry, and causing a stock market crash that devalued our overvalued stocks, pensions, and property. The world wide financial system almost came down, resulting in the suspension of commerce. They tried to bring back the economy by bail-outs, pork spending, social programs, industry takeovers, cover ups, wage controls, excuses, and happy talk.

Now, the “Finance Reform Act” proposed does nothing to fix the politics and greed that caused the problem, and just grows more government. To fix the real problems we must demand that:

• No bank should be too big to fail. Community, State, National, and International Banks should be kept separate, and not allowed to buy or control banks outside of their class.
• Banks should not be forced to accept sub prime or high risk mortgages,
• Loans and mortgages with balloon interest rates should be outlawed.
• Banks or brokers issuing a loan should guarantee and retain responsibility for that loan.
• Loans should not be sold to other financial institutions without the loanee’s approval.
• The churning of financial and real property accounts by brokers should not be allowed.
• The award of any broker commission should only be granted for the original sale.
• All financial instruments must be separated or bundled by type and risk for any resale.
• The Community Reinvestment Act should be repealed.
• Freddie Mac and Fannie Mae should be reorganized because they have been mismanaged and under audited while bribing Congress to see nothing wrong.
• Felony indictments should be issued for all persons involved in illegal, deceptive acts in the application, issuance, resale, management, auditing, or governance of financial instruments.

We must repair our greed abused financial system by adopting the above, and by fixing the political abuse with our votes. We must resist this administration’s attempt to gain control over our capital and our financial system, so they can redistribute the wealth.

REMEMBER IT’S OUR MONEY, NOT THEIR MONEY!

JR Lynn April 20, 2010