The Other McCain

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Why The Sudden Bi-Partisan Financial Regulation Interest?

Posted on | April 21, 2010 | 17 Comments

by Smitty

After the economic stun-ulus, auto takeover and the ObamaCare fiasco, the default position amongst conservatives is that the 111th Congress couldn’t lead two nuns in one minute of silent prayer. Now the Senate is setting about considering Wall Street regulation, to howls of derisive laughter, combined with angst at the economic sodomy to follow.

The National Review’s Daniel Foster points to the weakening of the GOP on Wall Street Reform:

Republican Sen. Charles Grassley (R., Iowa) crossed the aisle today, and voted with all 12 Democrats on the Senate Agriculture Committee to send sweeping new derivatives regulation to the Senate floor, where it will be merged with the Dodd bill as part of the Democrats’ far-ranging effort to reshape Wall Street.
Grassley breaking-of-rank is the latest in a series of signs that Senate Republicans are softening their tone on the Democrats’ financial reform bill, and that Democrats, for their part, seem willing to negotiate.
The change in tone was reflected in remarks by Senate Minority Leader Mitch McConnell (R., Ky.), who said he was “heartened to hear that bipartisan talks have resumed in earnest,” and later told reporters he is “convinced now there is a new element of seriousness attached to” negotiations to iron out differences in the bill.

No Quarter falls short of enthusiastic:”Just Another Dog and Pony Reform Show”

. . .you might want to know that there is a sizable group of economic experts and even democratic supporters who think that what is being offered is at best a half measure that falls far short of what is needed to prevent another financial crisis.

Many quotes and links to Real News clips at No Quarter.

Charles Krauthammer’s realpolitik modeling tool must be fully charged:

The point is everybody understands if the financial system is at risk, if a major institution is about to drag the rest down, the feds will intervene no matter what is in the bill or no matter what anybody says today. The text of the bill is irrelevant. It happened in ’08 and no government will allow the collapse of the banking system.
So it’s because of our recent history that everybody understands a bailout will happen one way or the other. So I think all of this arguing over the details is really a matter of positioning. . . .
This is all about the elections, upcoming elections. Obama wants a narrative where he says: Yes, I haven’t attacked unemployment, but I gave you health care and I’m attacking Wall Street. It’s a winning hand. The Republicans ought to settle, get it over with, and put it behind them.

It is only a winning hand as long as people are ignorant of what a sham the whole Goldman Sachs situation is.

Tangential surprise, from Gateway Pundit:
“White House: President Obama WILL NOT Return $1 Million in Donations From Goldman Sachs”

And who else besides the POTUS accidentally benefits immensely?
William Jacobson introduces “Senator Hedge Fund”:

Now Schumer is holding himself out as a leader in the effort to reform Wall Street as part of the effort by Democrats to raise a populist argument in the run-up to the November elections.
Expect Schumer publicly to treat his former Wall Street friends the way he treated a flight attendant, now that the spotlight is on the money shoved deep into his and other Democrats’ pockets for years.
Privately, Schumer will see to it that the “reforms” are for show only, so that he can go back to the Wall Street fundraising well again and again and again.

Speaking of what a farce the reform is, getting to the heart of the title, Jonah Goldberg had this bit from a reader, pursuant to the unprecedented Goldman Sachs fraud case that unexpectedly dropped in time to help generate a good crisis soundtrack for the legislative rollout:

Goldman is NOT being thrown under the bus. This is a rope-a-dope scam and Goldman is in on it. A politically divided SEC has brought a very weak case that will never see a court room. It will be settled with a wrist-slap. In return for being made the whipping boy — which Goldman is very used to and even thrives on — it will get a “regulation” bill that enshrines too-big-to-fail status upon it and which will give it the same competitive advantages that Fannie Mae and Freddie Mac enjoyed. That is, an implicit taxpayer guarantee. It will then be able to borrow at lower rates and engage in riskier behavior at a lower cost. Meanwhile, smaller competitors will not enjoy this advantage, thereby making Goldman even more powerful and profitable.
Don’t buy the spin on this. Obama is not throwing Goldman under the bus. Goldman willingly jumped and will receive a huge payoff for its “sacrifice.” But the rest of us will pay. This is all a political scam from start to finish.

Overall, no good can come from fewer bureaucrats affecting more money with less accountability amidst denser thickets of legislation.

After some scratching about, here is the current version. A mere 357 pages, a financial magnum between the eyes.

The fact that there is real cash money, and not mere rhetoric on the line seems like it’s making the GOP go wobbly. Pay attention, you RINO knobs: the Tea Party will pillory you if you go reaching for the 30 pieces of silver.

Update: via Insty, Prof. Bainbridge has more on the Goldman Sachs case causing the good crisis that will let Congress do things it otherwise might lack justification to do.  Or something.

Category: Democrats, Economics, GOP

Comments

17 Responses to “Why The Sudden Bi-Partisan Financial Regulation Interest?”

  1. dad29
    April 22nd, 2010 @ 1:51 am

    Goldberg’s reader is exceptionally bright: he voiced exactly the same scenario that I did, although he added the juicy tidbit about GS getting ‘regulation’ which would further enhance GS’ bottom line.

    See: http://dad29.blogspot.com/2010/04/show-trial-of-goldman-sachs.html

    And no, I did not read Goldberg’s NRO piece beforehand.

  2. dad29
    April 21st, 2010 @ 8:51 pm

    Goldberg’s reader is exceptionally bright: he voiced exactly the same scenario that I did, although he added the juicy tidbit about GS getting ‘regulation’ which would further enhance GS’ bottom line.

    See: http://dad29.blogspot.com/2010/04/show-trial-of-goldman-sachs.html

    And no, I did not read Goldberg’s NRO piece beforehand.

  3. Ellie Light
    April 22nd, 2010 @ 9:02 am

    Wow, you really hit this one out of the old ballpark!

  4. Ellie Light
    April 22nd, 2010 @ 4:02 am

    Wow, you really hit this one out of the old ballpark!

  5. Virginia Right! News Hound for 4/22/2010 | Virginia Right!
    April 22nd, 2010 @ 5:32 am

    […] Why The Sudden Bi-Partisan Financial Regulation Interest? […]

  6. McGehee
    April 22nd, 2010 @ 1:09 pm

    GS getting ‘regulation’ which would further enhance GS’ bottom line.

    That’s another occasion for a Gomer sound bite. Regulation always benefits the regulated more than anyone else, even when that’s not the overt intention.

  7. McGehee
    April 22nd, 2010 @ 8:09 am

    GS getting ‘regulation’ which would further enhance GS’ bottom line.

    That’s another occasion for a Gomer sound bite. Regulation always benefits the regulated more than anyone else, even when that’s not the overt intention.

  8. teaNV
    April 22nd, 2010 @ 1:24 pm

    What is the argument against allowing the complete collapse of the global financial system? It is simply assumed that the system is worth saving. It is not. Let it die. IN fact, we should be working to KILL IT OFF. It will be the single greatest liberation of the people of the world from global systems of violent oppression since world war II and the end of the cold war.

  9. teaNV
    April 22nd, 2010 @ 8:24 am

    What is the argument against allowing the complete collapse of the global financial system? It is simply assumed that the system is worth saving. It is not. Let it die. IN fact, we should be working to KILL IT OFF. It will be the single greatest liberation of the people of the world from global systems of violent oppression since world war II and the end of the cold war.

  10. theCL
    April 22nd, 2010 @ 2:35 pm

    If the trade went down as reported, it was indeed a fraudulent trade (and everyone recovered their losses (and Goldman their profits) through the AIG bailout). But that said …

    I agree with Goldberg’s reader wholeheartedly. Goldman wants this regulation. This is all just political theater. And yes, the US Treasury is a wholly owned subsidiary of Goldman Sachs.

    It’s time to end the creature from the progressive era – the Federal Reserve.

  11. theCL
    April 22nd, 2010 @ 9:35 am

    If the trade went down as reported, it was indeed a fraudulent trade (and everyone recovered their losses (and Goldman their profits) through the AIG bailout). But that said …

    I agree with Goldberg’s reader wholeheartedly. Goldman wants this regulation. This is all just political theater. And yes, the US Treasury is a wholly owned subsidiary of Goldman Sachs.

    It’s time to end the creature from the progressive era – the Federal Reserve.

  12. molonlabe28
    April 22nd, 2010 @ 3:48 pm

    I agree with teaNV.

    The cure is worse than the crisis.

    Let the financial institutions, which behaved like compulsive gamblers at a Tunica casino, fail.

    Don’t blink like Congress and GWB did with TARP.

  13. molonlabe28
    April 22nd, 2010 @ 10:48 am

    I agree with teaNV.

    The cure is worse than the crisis.

    Let the financial institutions, which behaved like compulsive gamblers at a Tunica casino, fail.

    Don’t blink like Congress and GWB did with TARP.

  14. Adobe Walls
    April 22nd, 2010 @ 7:52 pm

    Repeal the 111th congress, every single bill.

  15. Adobe Walls
    April 22nd, 2010 @ 2:52 pm

    Repeal the 111th congress, every single bill.

  16. HG
    April 24th, 2010 @ 5:07 am

    There are a few questions I have about blaming Wall Street for the financial mess and the need for regulation:

    Was not the financial catastrophe caused because lending standards were lowered by banks? Is not the Federal government supposed to oversee these laws so that this doesn’t happen? If lending standards were not lowered there would be no subprime mortgages and securities created based on them would have no problems. By 2008 Fannie and Freddie, which are govt. sponsored enterprises, owned directly or indirectly 5.1 trillion in residential mortgages which is about half of the entire US mortgage market. A big mandate of Fannie and Freddie was to give loans to people who had lower incomes (52% by 2005).

    Also, the rating agencies were giving AAA ratings to securities based on these subprime mortgages. Whose job is it to make sure these agencies are doing their job properly? Is it not the govt.?

    Based on this did the govt. not create this whole atmosphere of irresponsible lending? How can you blame Wall Street for selling securities based on these mortgages when it was the govt. that was either promoting or looking the other way when millions of these subprime mortgages were being created by banks?

    For example: in the 19th century there were a lot of monopolies. Would one say that capitalism is bad because it leads to monopolies or would one say that the govt. needs to create proper laws to deal with this, i.e. anti-trust laws which took care of the problem? Another example: let’s say that the govt. suddenly becomes very lax on enforcing pharmaceutical laws and as a result all kinds of bogus drugs and elixirs come into the market seriously affecting the health of a large number of consumers. Would you say that this is a failure of capitalism or would you blame the govt. for not doing its job?

    If the govt. ensures that banks follow proper lending standards and rating agencies don’t give bogus ratings isn’t the problem solved? What is the rest of the regulation all about? After all, there is nothing inherently wrong with securitization of mortgages or with selling credit default swaps that are just insurance for these mortgage based securities.

    Does capitalism not work wonderfully if it is encapsulated within the right laws that are enforced properly and create a level playing field? Do you think the govt. is blaming capitalism for its own failures?

  17. HG
    April 24th, 2010 @ 12:07 am

    There are a few questions I have about blaming Wall Street for the financial mess and the need for regulation:

    Was not the financial catastrophe caused because lending standards were lowered by banks? Is not the Federal government supposed to oversee these laws so that this doesn’t happen? If lending standards were not lowered there would be no subprime mortgages and securities created based on them would have no problems. By 2008 Fannie and Freddie, which are govt. sponsored enterprises, owned directly or indirectly 5.1 trillion in residential mortgages which is about half of the entire US mortgage market. A big mandate of Fannie and Freddie was to give loans to people who had lower incomes (52% by 2005).

    Also, the rating agencies were giving AAA ratings to securities based on these subprime mortgages. Whose job is it to make sure these agencies are doing their job properly? Is it not the govt.?

    Based on this did the govt. not create this whole atmosphere of irresponsible lending? How can you blame Wall Street for selling securities based on these mortgages when it was the govt. that was either promoting or looking the other way when millions of these subprime mortgages were being created by banks?

    For example: in the 19th century there were a lot of monopolies. Would one say that capitalism is bad because it leads to monopolies or would one say that the govt. needs to create proper laws to deal with this, i.e. anti-trust laws which took care of the problem? Another example: let’s say that the govt. suddenly becomes very lax on enforcing pharmaceutical laws and as a result all kinds of bogus drugs and elixirs come into the market seriously affecting the health of a large number of consumers. Would you say that this is a failure of capitalism or would you blame the govt. for not doing its job?

    If the govt. ensures that banks follow proper lending standards and rating agencies don’t give bogus ratings isn’t the problem solved? What is the rest of the regulation all about? After all, there is nothing inherently wrong with securitization of mortgages or with selling credit default swaps that are just insurance for these mortgage based securities.

    Does capitalism not work wonderfully if it is encapsulated within the right laws that are enforced properly and create a level playing field? Do you think the govt. is blaming capitalism for its own failures?