I'm not completely up on the whole new package of Obamatard Financial Reforms. I really don't plan to be, either, since wading through endless pages of financial terms and Senatorese about Sub-section 2651.V, appendix J, of United States Code... is about as rewarding as the wishful thinking that one day Arabs might actually discover their own retardation and make an effort to improve themselves has been. There are more constructive uses for my time; smoking, a vodka and tonic, and a hockey game come to mind.
But, you do have to pay attention to some aspects of this sort of thing, if only because if you don't, you miss the chance for a belly laugh and perhaps another insight into the Retards we let run our lives.
The Excuse for a new slew of Federal Regulations (i.e. Congressional and Presidential meddling in Financial Markets, in a subject they know little about, the creation of new Bureaucracies and the Strengthening of the Old and Ineffective Ones, and a smorgasbord of New Taxes) is that Wall Street Has Run Amok, and that it has Destroyed the American Free Market System, which required massive bailouts of every major financial firm on the planet. In order to Repair The Economy, and Save the Taxpayer from further abuse and grief, the government must, in the immortal words of Peter Arnett, "...destroy the village in order to save it..."
We need the government to be empowered to do things it's never been able to do before -- and give it the discretion to do it capriciously -- because the Old Way resulted in rampant fraud, crashing markets and a $700 billion bailout.
Hold yer horses there, Mr. Barack Hussein Ojerkoff!
The reason Wall Street failed (and I must admit, I'm not an expert here, just someone who watched how the Brokers and Bankers operate) , has nothing to do with regulations, or the lack of enforcement, thereof. In fact, you can trace most of the original problems directly TO regulations, or more specifically, Congressional action, and a lot of stupidity and greed on the part of people who should have known better, but who have no moral compass.
The first of these plagues was the repeal of the Glass-Steagall Act of 1933, a Depression-era safeguard which prohibited Banks, Brokerages, Mortgage Brokers and Insurance companies from being owned by the same entities, and their businesses intertwined. No sooner than this Law was repealed, than I saw the creation of Citigroup (where I was working at the time); it steadily acquired more and more business units, until by the time I left (2004), Citigroup contained the original Citibank and several regional/state banks (core banking services), Smith-Barney/Salomon Brothers/Nikko Securities and Schroeder's International (investment banking and securities trading -- and that's in addition to the previously-absorbed rumps of E.F. Hutton, and parts of the old Shearson-Lehman-American Express conglomerate), Traveler's Insurance (along with the Traveler's portfolio of smaller insurers), Primerica Corp. (mortgage lending and mortgage-backed securities), and approximately a dozen other, smaller operations, including several foreign (mainly Mexican) banks, or firms dedicated to more specific aspects of all-things-Financial.
The Idea was to create the Financial equivalent of a One-Stop Shopping Center, where you could walk into a Citi branch, and not only make a deposit, or get a new checkbook, but build a stock portfolio with your personal Smith-Barney financial advisor, apply for a mortgage through Primerica, get that college loan form your regional bank, buy auto or home insurance from a Traveler's Representative, all in a conveniently-located central location. And of course, all this cross-selling of services had it's benefits: if you used Citi finanical products exclusively, you got discounts, and you got other incentives mostly related to cheap promotional junk; you got free calculators, t-shirts, and other crap, all with that nifty Red Umbrella on it. If you had some scratch, you got better gifts. Eventually, Citibank grows to have it's fingers in every pie you can think of, and has money tied up in anything you can imagine. That's when it's not lending money to countries (Argentina and Russia, specifically) which default on billion-dollar loans more often than democrats make stupid statements.
The Second problem was a monetary policy promulgated by the "Genius", Alan Greenspan, who was so preoccupied by the specter of inflation, and struggling to understand an electronic revolution that overwhelmed a 70-year old's mental capacity, and who also made "Cheap Credit" his mantra. Cheap credit eventually made riskier investments easier, because cash was available at lower interest rates. That had two practical effects: it made the practice of borrowing money from the Fed at ridiculously-low interest rates, and then lending it (via mortgages and credit cards) at outrageous interest rates, very lucrative. It also helped to trap many Americans in debt. It made making riskier loans easier to hedge -- if there was a shortfall, you should be able to borrow money from the Fed to cover the losses, at practically no interest.
The practice of giving 300k mortgages to people who made less than 50k a year, at variable or higher interest rates, was a gold mine in this sort of environment. And it was safe, so long as everyone stayed gainfully employed, and managed the Minimum Monthly Payment. The practice of charging 18-25% interest on credit cards was even more lucrative, since people given access to more credit (thanks to loose interest policies and a consumer-based society hooked on the products of the Information Age) sucked the stuff up and began living via plastic instead of cash. They lost perspective on the value of money. If the suckers overextended themselves, no problem; Wall Street managed to get the bankruptcy laws changed so that no one walks away, anymore. It's all profit.
The final Nail in the Coffin was the belief that Everyone Deserves A Home of Their Own. That's a nice sentiment, but with all that easy credit and ridiculously-obtainable mortgages floating about, not to mention Congress driving the Banks to make this a reality for Low-Income people (i.e. deadbeats and minorities), or suffer the consequences, we created a certain mindset; not only do I deserve a Home of My Own, I Deserve a Home No one Else has Ever Lived in Before, Too -- and I can pay for it because there's all this Free Money flying around.
(A side note: this Homebuyer's Revolution led to another, smaller revolution; the vast array of Home-based television shows, like Dream House, or Home and Gardens TV, or those dumb shows where people renovate each other's houses based upon their own taste and such, and don't get me started on the whole A&E series of Gay Real Estate Agents and their House Flipping. They make this seem all-so-easy, and people laboring under the impression that a) money is easy to come by, and b) I can do what they just did made some of this appreciably worse).
The combination of easy mortgages, a marketplace who wanted more and unique housing, and government encouragement, the ability to pass off bad loans in as Mortgage-Backed Securities guaranteed by Freddie and Fannie at no risk, and the housing market was soon in full swing, producing New Homes like Inner-city crack whores produce illegitimate offspring; the market became saturated with houses that can only be sold so long as credit was easy to obtain..
And then, It Happened. Someone swiped half-a-Trillion dollars from the Economy on day in September 2008.
(Ed. Note: I say "someone" in the belief that the Fed, or anyone else involved, can never actually tell the truth about this event, and we will likely never know who was actually involved. If the Fed tells you it knows how it was done, and by whom, you might not like those answers, and might even begin to question why it was "they" were allowed to do what they did. If, on the other hand, the Fed should try to tell you that "it doesn't know How It Happened", that would be even worse. Either way, faith would be lost in the Federal Reserve System and the American Economy, and we'd be in an even bigger hole. I think, this, more than anything else, explains the speed and lack of debate, or even information, that preceded the $700 million Bailout. This country was either attacked economically by our enemies, either an act of economic terrorism or an attempt to weaken us in some way, or the Fed found itself the victim of a simple, and entirely-foreseeable-in-retrospect mistakes that someone probably brought to their attention, and which they failed to subsequently correct).
Citigroup (amongst others) became Too Big To Fail, because it had been allowed to become a bloated, under-capitalized frat house of extreme risk-takers driven by the promise of easy credit, which would save them from their worst mistakes. The outrageous profits to be gained by gaming the system were too heady a brew to ignore, and Financial Professionals are all about getting while the getting is good, no questions asked, no ethical or professional line that can't be blurred by fine distinctions or willing stupidity . It was a game made easier by the Federal Reserve and several Acts of Congress.
When the System Failed, the solution was to "pump" $700 billion into it in order to keep all the "Too-Big-To-Fails-Afloat". It's actual effect was to dry up all that low-interest liquidity that encouraged the bad loans and the Plastic Economy in the first place, further exacerbating the problem. The $787 billion "Stimulus" bill further reduced the amount of available credit by restricting the money supply. The subsequent printing of money to pay for this "stimulus" has lessened the value of what cash can be obtained through inflation. The Wall Street firms may have gotten colossal amounts of bailout funds -- but they got it at the expense of every other business in America. And far from clearing the "toxic assets" from their books with that money, like they were supposed to, the Big Firms simply propped up their stock prices, which allowed their Executives (the one's who presided over this mess) to profit even more, and pay back the loans quickly in some cases. The speed involved in both the formulation of the original Bailout package, and the Stimulus Program, left little details like directing Wall Street on how to best spend that money and making certain they used it for that specific purpose, completely un-discussed, let alone enacted or included in the final product.
The Housing Market, one of the foundations of the economic system, is in disarray: it's got units it can't -- and perhaps never will -- sell. It's got houses that are going into foreclosure (because the sucking up of credit by the Fed and the Government are hurting their mortgage-holder's employers), and it will lose out on these, also. Large numbers of homes (old and new) will soon be empty, and simply left to rot, because high unemployment and harder-to-get credit will ensure there are no buyers.The Banks now hold so much worthless paper that the tellers are wiping their asses with it.
AIG, General Motors, Chrysler, General Electric, Citigroup, Shearson-Lehman, Goldman Sachs, Bear-Stearns/UBS, Merril Lynch, and their finance arms, are now owned, in large part, by the federal Government (incidentally, the Obama System of Government intervention is almost exactly how things worked in Nazi Germany). Obama already has command of these institutions by virtue of the bailout; now he wants the ability to micro-manage these companies for political ends, and to beat them up in the media to keep that Class Warfare theme going.
Obama now cites all this abuse and lack of oversight as a prime reason why we need a New Set of Rules. To Ensure that This NEVER Happens again. This is now something like my fifth or sixth "recession" and I've discovered that they always happen again, and usually for the same reasons.
People get greedy. People get stupid. Congress gets even greedier and stupider (because it's full of cloistered morons who don't know what the real world is like, and who expect to be bribed), and makes the process of being Greedy and Stupid much, much easier. We don't need Better Rules; we need Better Human Beings. The problem is, you're not likely to find either in the Government or The Boardroom.
Besides, we already had a system of punishing the guilty; It was called Bankruptcy Law, and it wasn't given the chance to work. The mentality (panic, really) of the time, was that bankruptcy was a giant No-No. It shouldn't be allowed to happen because the consequences would be so hideous (like the election of B.O. hasn't been a disaster?). The government didn't even allow the system it set up to work they way it was supposed to. It would have worked, too. And this "recession" would probably be a lot shallower and eventually shorter, if it had.
Having already facilitated the corruption of the Old System, then preventing the safeguards and punishments they mandated for that System to function -- all for selfish political ends -- the government, President Obama specifically, is now arguing that because The Old System Failed, because of our willing and purposeful failure to obey it's rules, we now require a Whole New System.
And there's no politics involved in it...at all.
Well, he's already sold the notion of "free" Healthcare, a political program that consists largely of staged media events and little of substance, Himself as a "post-racial-post-partisan" healer of Divine Origin, so why shouldn't he give this one a try, too?
The sooner we get a new Congress to rein this bastard in, the better off this country will be. We already have a system of laws to punish Goldman-Sachs. Let it work the way it's intended, and reserve judgement on whether or not new rules are required until the Goldman situation has been hashed out. The speed and lack of debate with which Obama is pushing this new initiative is part of the same pattern he's used on Healthcare and Cap-and-Trade, and seems to be his preferred method of operation; get the press release, get the photo-op, screw the details.