Posts Tagged ‘Regulation’

Today, the federal government finalized the finance reform bill.  From all that I have spoken to that have read through it, it does little to actually correct the isses we experienced over the past 10 years.  Hooray!  One more large monster federal bill that has little benefit but lots of impact.

Two quotes in the attached article unnerved me.  The first was from Mr.  Dodd (senator of CT) where he said;

“No one will know until this is actually in place how it works.”

And the other was from Mr. Frank (representative of MA) where he is quoted;

“We’ve put in the hands of the president a very powerful set of tools for him to reassert American leadership in the world”

Why would any sane person want these quotes attributable to themselves?  Let’s see, the first one says that we just made 2,000 pages of laws and have no clue what the impact will be for the one industry that touches every single citizen.  Or, the 2,000 pages of laws that we all just passed are so general and vague that one can assume that they will be deployed in ways that are completely arbitrary, ways that we can never fully grasp.

The second quote jives with it perfectly.  Mr. Frank essentially celebrates the fact that our representatives, those that we rely on to check and balance the president, have given enormous power to one person.  And to make it all the more exhilarating, a president that has no economic background and has demonstrated a complete lack of respect for free markets.  Oh joy!

And one more thing, please read towards the bottom where they mention that 18,000 auto dealers (actually, the number is closer to 16,000 after the government forced some to close down)(also, at least 20% of them are selling government made cars) are exempt from the consumer protection portion of the law.  Keep in mind, the second largest expense for most citizens is an automobile with the majority of them financed.

Corrupt and stupid make for a very bad combination.  Worse, when it’s mixed with power.

Congress, The White House, and The Media all seem to agree that the answer to the question, “What went wrong?” appears to be that we did not have enough regulation, that the system (whatever that is) was not protected successfully enough from the BAD ACTORS, i.e. bankers, Wall Street, borrowers, car manufacturing executives, derivative traders, hedge fund managers, insurance companies, etc. An apparent chorus of the elected and those wishing they were in power (journalists) all agree that we need more regulation of commerce to prevent another breakdown of the system (whatever that is).

Before going further, let me suggest that you can not sell securities, make loans, finance cars, offer insurance, or manage individuals’ money unless the federal government (or state in which you wish to do business) says you can, period. Anyone who does, has the federal government’s or respective state governments’ specific and acknowledged permission to do so.

I offer that one reason that the system (whatever that is) experienced a breakdown is not from too little regulation, but from the false sense of security created by too much.

I have asked myself many times, who (because the system is us) gives all of his or her net worth to some fellow with out anything more than his figurative hand-written receipt? Is it possible that investors trusted Bernie with the dough because he could claim that he was being regulated (watched) by FINRA, the Federal Government (SEC) and every state securities commissioner in the nation? I think that smart, rich people were lulled into a false sense of security knowing that someone else was looking after their best interest.

Likewise, what prospective homeowner (because the system is us) agrees to repay more money than he or she will make in a lifetime of working? Our banks and lenders are heavily regulated. If they are willing to lend (or purchase my mortgage), it must be ok. Where is the regulator when you have to show your bad credit to the system?

Perhaps the system would be more guarded and careful with its money and its credit if the system did not know deep in its hearts that the federal and state governments have everything under control and are there to keep us from harm. Does it ring true that more of the same is the solution?