We have written that the Act is vague in many respects. However, some of it is specific and some of it is good. For example, it puts an end to “Liars Loans” also called NINJA loans because you could get a mortgage with No Income, No Job and No Assets. Also good is the provision known as the Volcker Rule that puts limits on how far a bank can go in trading in derivatives and swaps for their own account, i.e, how much risk they may take in search of trading profits.
Anyone who listens to the excellent Howard Clark show knows there is need for reform in the credit card industry. We have no details, but the Act purports to bring needed reform here. Sounds good.
What the Act fails to do, and fails completely, is to fulfill its stated purpose. That is to take measures to prevent a recurrence of the financial collapse from which we are all still suffering. Can anyone deny the primary cause was too many sub-prime loans? Fannie Mae, Freddie Mac, Barney Frank, Franklin Raines, Andrew Cuomo and Jamie Garelick were the major players in designing, building, promoting and protecting the house of cards whose inevitable collapse created the crisis. It would be naïve to expect Barney Frank to censure Barney Frank but not to reform Fannie and Freddie is an unmitigated disgrace.
Space here does not allow a complete analysis of the causes and contributors to the crisis and the recession. Fortunately, some excellent, well written articles on the subject were published at Town Hall a year and a half ago. I urge you to click the blue links and read them.
Mortgage Mess Blame Game.
The Day the Democrats Brought Down the World
(Confession: I wrote them)
The name of the new package of financial regulations is The Frank-Dodd Act. Given what we know about Barney Frank, there must be more than one good joke there, but we have decided to let it be. We are not going to sully this site by saying things like ‘In naming the law, they were wise to use a dash and not an ampersand’.
By the time you read this, the bill may have been signed into law but it will not yet have been written. We say this because much of it is vague, leaving the de facto law up to the regulators to determine. For example, The Act requires each federal agency to establish an Office of Minority and Women Inclusion which is to be responsible for all matters relating to diversity in management, employment and business activities. What does that mean? What is the law? It is not yet written. The law will be, what the agency yet to be formed, says it will be.
The Act establishes a Bureau of Consumer Financial Protection with the power to close down a business that the Bureau determines poses a risk to consumers due to some measure of financial instability, instability as determined by the Bureau. In this regard one might say there is no law to observe, no law you must break for the Bureau to be able to close you down.
“No one will know until this is actually in place how it works”. Now there’s a profound truth coming straight from a Democrat, the man who wrote the bill, a man who knew whereof he spoke.
This law is to the financial industry, what Obamacare is to the health-care industry – an enormous expansion of government control over a significant section of the American economic system. It is ingenious to the extent that it empowers bureaucracies to govern by rule change without the need for legislative action.
Both The Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act (all one law known as Obamacare) and the Frank-Dodd Act are major advancements in Obama’s march toward the goal of a grand centrally planned state.
Bob B<!– AddThis Button BEGIN –>