The Obama administration is keenly interested in expanding the already unconstitutional degree of control over a formerly free market system and victory over the health care bill has given the administration some momentum. Several key congressmen including Republicans who say they oppose the bill have already been in consultation at the White House over this issue. Obama will be traveling to Wall Street on April 22 to deliver an address demanding “swift Senate action” for this latest “reform” package. Opposition is not expected from that quarter as it will be akin to preaching to the choir.
Obama’s Treasury Secretary Timothy Geithner said on “Meet the Press” that the Senate is very close to a congressional meeting of the minds on the financial regulatory bill. He also insisted that “taxpayers will not be on the hook for bailing out these large institutions from their mistakes” under the bill. Geithner, who has been the Obama administration’s point man for this financial regulatory scheme refers to the legislation as one that would now allow large financial institutions to fall into bankruptcy. But of course, bankruptcy was always an option and “too big to fail” bailouts were created by the government. Just as with a path to citizenship which already exists, an “orderly process to bankruptcy,” a quote from Senator Mark Warner (D. Va.), already exists as well.
The Dodd bill — said to have been written by Sen. Warner with Tennessee Republican Sen. Bob Corker making a cameo appearance in the resolution language department — focuses on this country’s central bank, the Federal Reserve. Instead of relieving the Federal Reserve of the broad and sweeping powers it currently holds and that many Americans have called for an end to, this 1,336-page gem would grant the Fed expansive new regulatory authority, in more and more areas and layers and layers deep.
Dodd’s bill contains another $50 billion bailout fund for financial institutions. Although the White House tried to deny it with one senior administration official, who insisted on anonymity, being reported by Congressional Quarterly as saying, “There are no more taxpayer-funded bailouts, period.” This may be a slight-of-hand trick because The Hill reports Senator Charles Schumer (D. N.Y.) as defending the $50 billion bailout fund as being collected from large institutions and “not the taxpayer.” There is an "Orderly Liquidation Fund" of $50 billion in the bill, which is what's being referred to as a $50 billion bailout fund by Republicans. Democrats, who say the $50 billion fund was a Republican suggestion are nonetheless fighting removal of this provision from the bill.
The financial regulatory bill also creates a new consumer protection policy that may end up residing inside the Federal Reserve. This new Consumer Financial Protection Agency (CFPA) would be formed to monitor things like credit cards and mortgages — and far more, according to the U.S. Chamber of Commerce. The Chamber’s website claims that the text of the bill would empower the new agency with legislative-type authority which it could exercise by simply issuing new rules. The list of private business which the CFPA may end up overseeing is eye-opening.
A real kicker for some is granting the President power to appoint the president of the New York Fed (Sec. 1157 of S. 3217), which would dramatically change the political dynamics already at work in the current, but unconstitutional central banking system run by the Federal Reserve.
Another wrinkle in all of this is the recent introduction of separate legislation by Sen. Blanche Lincoln (D-Ark.) to regulate over-the-counter derivatives because the President wanted tougher controls than are contained in the Dodd measure. Her proposal would give federal regulators very broad authority to require mandatory trading and clearing of standardized derivatives. This has been interpreted by some to mean that the federal government will decide just which players in the financial market can participate in buying and selling OTC derivatives. Most likely, smaller players will be frozen out in favor of the fatter financial institutions and/or the favored sons of Federal Reserve cronies, moving control of such things further away from Congress and the people. Lincoln’s legislation is expected to be folded into Dodd’s bill in some way before a final vote on the Dodd bill is taken.
This entire package, then, is a cleverly crafted regulatory scheme that would guarantee further monetary manipulation in conjunction with an expanded set of regulatory activities for the federal government. It is a fully stocked tool chest loaded with the latest in gadgets and gizmos, devices and mechanisms that would enable the Federal Reserve to heavily police if not absorb the entire financial sector and destroy any vestige of the free market.
However, this bill is being presented to the American people as legislation that would end the “too big to fail” policies that bailed out banks and financial firms in the not-so-distant past, as if the American people were the authors of such policies. But Geithner and his cohorts will get away with such statements because Americans seem to have amnesia in these matters. The banking system’s woes and market failure are not a product of deregulation, or with the regulators themselves, but are the result of an already huge and oppressive government regulatory scheme, and this will swell to a gargantuan size with what is basically the Federal Reserve Act II, which could easily be subtitled, “The Final Curtain.”
Up to now there has been little — unless one considers a letter in opposition to the bill sent to Sen. Dodd and signed by 41 Republican Senators and one threat of a filibuster a strong reaction — perceptible response from the minority party in Congress. In fact, the ensuing debate of this bill on the Senate floor may turn out to be the non-debate of the decade.
The New York Times reported on April 13 that Senator Mitch McConnell (R-Ky.) commented, “This bill not only allows for taxpayer-funded bailouts of Wall Street banks; it institutionalizes them.” Admitting that the bill grants new legislative-like powers to the Federal Reserve, the FDIC and the Treasury Department, McConnell concluded, “The fact is, this bill wouldn’t solve the problems that led to the financial crisis. It would make them worse.”
One question lies with McConnell, himself. Will he have the courage of his own convictions, or does he present but a façade of opposition who will cave like so many others, in the end? It appears from some comments he has made concerning the bill that neither he nor his confreres are interested in defeating the bill or objecting to it in principle, only changing it. While it’s true he said that the bill “is a permanent taxpayer bailout of Wall Street banks. That is not what the American people have in mind,” he also added, “Let's get it right and do it on a bipartisan basis, which we all thought was the direction this issue was going to take over the months.” He reiterated his bipartisan mentality Sunday April 17 on CNN.
The talking points to be used in support of this disastrous proposal will focus on the greed and excesses of Wall Street and how the economy was crippled because government oversight wasn’t intensive enough. Another tactic will be to use the “common ground” cliche, as though debate should be limited not to principles, but to miniscule details of the legislation only. But the most prevalent canard to gloss over the bill’s real import will be that the government simply must act now to prevent large financial institutions from taking advantage of the loopholes and liabilities in the government-created financial quagmire.
Any real dialogue on this bill would involve discussion on whether the free market system needs to be regulated in the first place, and whether or not the authority to do so is in the Constitution. It would also recognize that this overhaul scheme is nothing but an interventionist bureaucracy designed to micromanage the private market system.
So, what will solve the problems that led to the financial crisis? For constitutionalists, especially those like Ron Paul who already know that centrally planned and operated, government-manipulated economies always fail, it’s really quite easy, but it entails real pro-active work: End the Fed.
One giant step in the process would be to stop passage of any new financial regulatory overhaul legislation by educating friends and family members, acquaintances and coworkers to what is detailed in this legislation, and to the economic devastation that would result. Otherwise, to quote Business Insider, “We’ll be destabilizing the system while creating an illusion of stability. If this thing passes, start your stop watches. Tick. Tick. Tick. Ka-boom.”
We must stir up enough furor over the loss of our financial freedoms that the result will be such a collective outcry of Biblical proportions that even hardened politicians will have to hear the thunderous sound.
Make sure you contact your representatives in the Senate and House (click here to send a pre-written, editable email; click here for their other contact information to make phone calls and personal visits); do it early and do it often. Demand that they adhere to constitutional principles and get their regulatory noses out of this country’s financial affairs, or surely America will be reduced to Third World status. More government has never been the answer, not even one time, since the ratification of our Constitution.