June 17, 2009
And, the federal power grab continues…

Posted at 9:26 am, in: Regulation
Tags: Barack Obama

Obama’s plan to take over the financial markets has been revealed:

“We must act now to restore confidence in the integrity of our financial system,” the draft of the administration proposal says. “The lasting economic damage to ordinary families and businesses is a constant reminder of the urgent need to act to reform our financial regulatory system and put our economy on track to a sustainable recovery.”

President Barack Obama’s plan will touch almost every corner of financial markets, from tougher consumer-protection policies to stricter rules over exotic financial products, such as credit derivatives. The plan would bring many of the products and companies that previously operated outside of the banking system under federal scrutiny.

The administration’s proposal would give the government the power to take over and wind down a large financial company, a power that government officials lacked last year when the financial crisis was intensifying. It would also give the central bank more powers over the payments and settlements systems in U.S. financial markets to prevent a breakdown that officials fear could destabilize the economy.

The plan would abolish the Office of Thrift Supervision and create a new national regulator for financial institutions, aimed at making it harder for companies to shop between supervisors.

One new detail is that any large, interconnected company that the government wants to take over and break up could be pushed into government seizure by the Treasury Department, if certain conditions are met. Once taken over, the companies would typically be run by the Federal Deposit Insurance Corp., but the proposal gives the government discretion to change the way this might work. The Treasury has said these powers were necessary, but the details of how they would work were unveiled for the first time in this proposal.

Hedge funds and other private pools of capital would have to register with the Securities and Exchange Commission. Thousands of financial institutions would be required to hold more capital in reserve to protect against unexpected losses, and companies would also have to retain a portion of the credit risk for loans they have packaged into securities.

The Fed emerges from the plan with the power to oversee from top to bottom almost any financial company in the country, including the firms’ foreign affiliates. It would also hand the central bank another victory by allowing it to oversee any commercial company that owns a banking charter known as an industrial loan company.

The government proclaiming that they must act now is probably not the best way to restore confidence. They said that about the first bailout under Bush, which failed to fix the problems. They said that with the stimulus bill, which is being exposed for the fraud and waste it would inevitably be. And, we’re seeing it with the push for health care reform.

Obama must be a pretty intense man. Everything has to happen now, or else gloom and doom will ensue. There is such a sense of urgency! Good thing my brilliant fellow Americans were smart enough to vote him in. Our Savior has arrived to save us!

Opinion polls show that Americans have a low opinion of government, yet they turn to government to fix all of their problems. Do they not realize the idiocy of that joke? The government is made of those same people the vast majority of Americans distrust and thinks are incompetent. Government creates problems, it doesn’t fix them. Have Americans forgotten this? When was the last time anyone really thought to themselves, “Thank goodness for the government! They really solved that problem.”