How confusing.
First Congress passes Dodd Frank. A law which imposes crushing and expensive regulatory burdens on consumer banking. And generally dissuades banks from doing as much consumer banking activity as they did prior to the law. A normal economic reaction when a producer experiences rises in costs of delivering a service- less is delivered.
So BofA responds by cutting 30,000 net employees and shifting focus from retail to institutional banking, because new legislation has made the former less profitable.
To make up revenues lost by new credit and debit card rules, BofA recently announced- explicitly and transparently- a new $5 fee in any month that a customer uses their debit card.
Wonderboy responded, when asked about the new fee, by attacking BofA for hidden fees.
But it's not hidden. It's a natural and expected response to Dodd Frank, and totally transparent. It's meant to drive customers back to using credit cards for small and mid-sized transactions, which will recoup some of the revenue for BofA, at no cost to customers who would pay the balance in the current period anyway.
Yet now people are protesting this explicit fee, which they have a choice not to incur. And Wonderboy blasts BofA for a fee that meets his own requirements.
Showing posts with label Regulation. Show all posts
Showing posts with label Regulation. Show all posts
Tuesday, October 18, 2011
Tuesday, June 21, 2011
Misinformation & Disinformation Regarding the Boeing South Carolina Facility
Sometimes I think the Wall Street Journal publishes editorials with little merit both in order to appear to present balanced views and to let readers see how silly and shallow some liberal views truly are.
If so, a recent editorial by Thomas Geoghegan entitled Boeing's Threat to American Enterprise surely qualifies. Geoghegan is evidently a union-representing attorney, so it's not surprising that his perspective is a liberal one. But it also seems to have seriously affected what passes for analysis on his part.
His editorial contains quite a bit of bluster and slanted characterizations of the Boeing situation. Geoghegan matter-of-factly describes Boeing CEO's McNerney's explanation of the opening of its Charleston, South Carolina Dreamliner facility as "payback" for past machinists' strikes in Washington state. It's more likely that, rather than being a second facility, the South Carolina facility would have become the primary and sole assembly site, had Boeing really intended such "payback."
However, what caught my attention was the author's baldface contention that companies which have relocated from largely union shop states in the north of the US to right-to-work states south of the Mason-Dixon line have mostly failed. For example, he wrote,
Why is Boeing, one of our few real global champions in beefing up exports, moving work on the Dreamliner from a high-skill work force ($28 an hour on average) to a much lower-wage work force ($14 an hour starting wage)? Nothing could be a bigger threat to the economic security of this country.
"We should be aghast that Boeing is sending a big fat market signal that it wants a less-skilled, lower-quality work force. This country is in a debt crisis because we buy abroad much more than we sell. Alas, because of this trade deficit, foreign creditors have the country in their clutches. That's not because of our labor costs—in that respect, we can undersell most of our high-wage, unionized rivals like Germany. It's because we have too many poorly educated and low-skilled workers that are simply unable to compete."
The author's lack of understanding of economics begins to be apparent in those passages. He summarily equates lower wages with lower skills, ignoring the effect of unions on wages. Plus he freely tosses in macroeconomic fiscal and monetary policies to cloud the very issue he purports to illuminate.
Then Geoghegan delivers his main point,
"We depend on Boeing to out-compete Airbus, its European rival. But when major firms move South, it is usually a harbinger of quality decline. Over and over as a labor lawyer in the 1980s and '90s, I saw companies move away from Chicago, where the pay was $28 an hour, to some place in South Carolina or Louisiana where the pay was about half that. While these moves aggrieved me as a union lawyer, it might have consoled me as an American if those companies went on to thrive globally.
But too often, alas, it was the beginning of the end, as it was for Outboard Marine Corporation, where I once represented workers. In the 1990s the company went from the high wage union North to the low wage South and was bankrupt by 2000. There are reasons workers in the North get $28 an hour while down in the South they get $14 or even $10. Adam Smith could explain it: "productivity," "skill level," "quality." "
I was expecting another five or six clear-cut examples, but Geoghegan only offers Outboard Marine. We don't know the nature of the market, the firm's competition or overall competitive position. Instead, Geoghegan hangs the firm's ultimate demise purely on its choosing to employ less-expensive labor in the South.
Nowhere does Geoghegan mention that two premier German luxury auto makers, BMW and Mercedes Benz, located US plants in South Carolina. Of course, those examples give the lie to his argument, so that explains their omission.
"Here is yet another American firm seeking to ruin its reputation for quality. Why? To save $14 an hour! Seriously: Is that going to help sell the Dreamliner? In terms of the finished product, the labor cost is minuscule: $14 in hourly wage, at most. It's incredible that conservatives claim such small differences in labor cost would be life or death to Boeing. It's not labor cost but labor skill that is life or death to the survival of Boeing, never mind pilots and passengers."
Ironically, though Geoghegan claims familiarity with McNerney's reasons for Boeing's South Carolina facility, he evidently missed the main one. It's not the hourly labor cost but the need to have a reliable assembly facility not prone to wildcat or other work stoppages which would affect Boeing's ability to deliver its planes to customers as promised.
Some people call that "quality," as in a non-quantitative reason to buy a product. On-time delivery would seem to fall in that category.
Geoghegan then repeats his contention that companies relocating to the South of the US fail, without a single additional example,
"If the history of runaway shops proves anything, it's that many go "South" in more than one sense of the word. If that sounds unfair to the South, it is union busting that has inflicted the real unfairness in the region: income inequality and inferior schools."
Funny how economists have missed what only Mr. Geoghegan knows: that it's the absence of unions in the South that account for its "inferior schools." If true, why would Mercedes and BMW deliberately locate there? Are we to infer that those companies sought out the least-educated workforce possible to man their American production facilities?
Then Geoghegan skips to another point, and it's a socialist one,
"At this moment especially, deep in debt, we cannot afford to let another company like Boeing self-destruct. Boeing is not a product of the free market—it's an extension of the U.S. government. Over the years, our taxpayers have paid to create a Boeing work force with exceptionally high skills. That work force is not just an asset for Boeing—it's an asset for the country. Why should the country let Boeing take it apart? Every American should be rooting for the NLRB's general counsel, as the board itself has not yet found a violation."
I guess that comes as a surprise to Boeing shareholders. Now we learn that Boeing's workforce, which doesn't actually "belong" to Boeing, thanks to our country's free market principles, has been developed to be an asset "for the country" which the firm is going to "take...apart." The author's contentions smack of raw socialism. Everything a company has is government-provided, and what it creates is common property, too. At least Geoghegan isn't shy about displaying his socialism.
His final paragraph reveals his deep misunderstanding of how Boeing operates.
Most depressing of all, Boeing's move would send a market signal to those considering a career in engineering or high-skilled manufacturing. It is a message that corporate America has delivered over and over: Don't go to engineering school, don't bother with fancy apprenticeships, don't invest in skills. No rational person wants to take on college or even community college debt to come out and work on the Dreamliner—which should be the country's finest product—for a miserable $14 an hour. If a single story in the news can sum up the reasons for America's global decline, it's the decision to build a Dreamliner that will gut the American dream."
I wasn't aware that Boeing's engineers are unionized. Or that machinists designed the Dreamliner. All through his editorial, Geoghegan has argued on behalf of the unionized machinists on whose behalf the NLRB's attorney has attempted to stop Boeing's South Carolina plant. But Geoghegan ends his piece arguing on behalf of skilled engineers who are not the subject of the fight over Boeing's Charleston facility.
Aside from the wandering, ill-focused nature of his editorial, I found Geoghegan's lack of extensive convincing examples of his main contention, that moving facilities to the South US causes business failure, to render his position completely lacking in credibility. The rest of his poorly-reasoned piece only adds evidence of the weakness of his case.
If so, a recent editorial by Thomas Geoghegan entitled Boeing's Threat to American Enterprise surely qualifies. Geoghegan is evidently a union-representing attorney, so it's not surprising that his perspective is a liberal one. But it also seems to have seriously affected what passes for analysis on his part.
His editorial contains quite a bit of bluster and slanted characterizations of the Boeing situation. Geoghegan matter-of-factly describes Boeing CEO's McNerney's explanation of the opening of its Charleston, South Carolina Dreamliner facility as "payback" for past machinists' strikes in Washington state. It's more likely that, rather than being a second facility, the South Carolina facility would have become the primary and sole assembly site, had Boeing really intended such "payback."
However, what caught my attention was the author's baldface contention that companies which have relocated from largely union shop states in the north of the US to right-to-work states south of the Mason-Dixon line have mostly failed. For example, he wrote,
Why is Boeing, one of our few real global champions in beefing up exports, moving work on the Dreamliner from a high-skill work force ($28 an hour on average) to a much lower-wage work force ($14 an hour starting wage)? Nothing could be a bigger threat to the economic security of this country.
"We should be aghast that Boeing is sending a big fat market signal that it wants a less-skilled, lower-quality work force. This country is in a debt crisis because we buy abroad much more than we sell. Alas, because of this trade deficit, foreign creditors have the country in their clutches. That's not because of our labor costs—in that respect, we can undersell most of our high-wage, unionized rivals like Germany. It's because we have too many poorly educated and low-skilled workers that are simply unable to compete."
The author's lack of understanding of economics begins to be apparent in those passages. He summarily equates lower wages with lower skills, ignoring the effect of unions on wages. Plus he freely tosses in macroeconomic fiscal and monetary policies to cloud the very issue he purports to illuminate.
Then Geoghegan delivers his main point,
"We depend on Boeing to out-compete Airbus, its European rival. But when major firms move South, it is usually a harbinger of quality decline. Over and over as a labor lawyer in the 1980s and '90s, I saw companies move away from Chicago, where the pay was $28 an hour, to some place in South Carolina or Louisiana where the pay was about half that. While these moves aggrieved me as a union lawyer, it might have consoled me as an American if those companies went on to thrive globally.
But too often, alas, it was the beginning of the end, as it was for Outboard Marine Corporation, where I once represented workers. In the 1990s the company went from the high wage union North to the low wage South and was bankrupt by 2000. There are reasons workers in the North get $28 an hour while down in the South they get $14 or even $10. Adam Smith could explain it: "productivity," "skill level," "quality." "
I was expecting another five or six clear-cut examples, but Geoghegan only offers Outboard Marine. We don't know the nature of the market, the firm's competition or overall competitive position. Instead, Geoghegan hangs the firm's ultimate demise purely on its choosing to employ less-expensive labor in the South.
Nowhere does Geoghegan mention that two premier German luxury auto makers, BMW and Mercedes Benz, located US plants in South Carolina. Of course, those examples give the lie to his argument, so that explains their omission.
"Here is yet another American firm seeking to ruin its reputation for quality. Why? To save $14 an hour! Seriously: Is that going to help sell the Dreamliner? In terms of the finished product, the labor cost is minuscule: $14 in hourly wage, at most. It's incredible that conservatives claim such small differences in labor cost would be life or death to Boeing. It's not labor cost but labor skill that is life or death to the survival of Boeing, never mind pilots and passengers."
Ironically, though Geoghegan claims familiarity with McNerney's reasons for Boeing's South Carolina facility, he evidently missed the main one. It's not the hourly labor cost but the need to have a reliable assembly facility not prone to wildcat or other work stoppages which would affect Boeing's ability to deliver its planes to customers as promised.
Some people call that "quality," as in a non-quantitative reason to buy a product. On-time delivery would seem to fall in that category.
Geoghegan then repeats his contention that companies relocating to the South of the US fail, without a single additional example,
"If the history of runaway shops proves anything, it's that many go "South" in more than one sense of the word. If that sounds unfair to the South, it is union busting that has inflicted the real unfairness in the region: income inequality and inferior schools."
Funny how economists have missed what only Mr. Geoghegan knows: that it's the absence of unions in the South that account for its "inferior schools." If true, why would Mercedes and BMW deliberately locate there? Are we to infer that those companies sought out the least-educated workforce possible to man their American production facilities?
Then Geoghegan skips to another point, and it's a socialist one,
"At this moment especially, deep in debt, we cannot afford to let another company like Boeing self-destruct. Boeing is not a product of the free market—it's an extension of the U.S. government. Over the years, our taxpayers have paid to create a Boeing work force with exceptionally high skills. That work force is not just an asset for Boeing—it's an asset for the country. Why should the country let Boeing take it apart? Every American should be rooting for the NLRB's general counsel, as the board itself has not yet found a violation."
I guess that comes as a surprise to Boeing shareholders. Now we learn that Boeing's workforce, which doesn't actually "belong" to Boeing, thanks to our country's free market principles, has been developed to be an asset "for the country" which the firm is going to "take...apart." The author's contentions smack of raw socialism. Everything a company has is government-provided, and what it creates is common property, too. At least Geoghegan isn't shy about displaying his socialism.
His final paragraph reveals his deep misunderstanding of how Boeing operates.
Most depressing of all, Boeing's move would send a market signal to those considering a career in engineering or high-skilled manufacturing. It is a message that corporate America has delivered over and over: Don't go to engineering school, don't bother with fancy apprenticeships, don't invest in skills. No rational person wants to take on college or even community college debt to come out and work on the Dreamliner—which should be the country's finest product—for a miserable $14 an hour. If a single story in the news can sum up the reasons for America's global decline, it's the decision to build a Dreamliner that will gut the American dream."
I wasn't aware that Boeing's engineers are unionized. Or that machinists designed the Dreamliner. All through his editorial, Geoghegan has argued on behalf of the unionized machinists on whose behalf the NLRB's attorney has attempted to stop Boeing's South Carolina plant. But Geoghegan ends his piece arguing on behalf of skilled engineers who are not the subject of the fight over Boeing's Charleston facility.
Aside from the wandering, ill-focused nature of his editorial, I found Geoghegan's lack of extensive convincing examples of his main contention, that moving facilities to the South US causes business failure, to render his position completely lacking in credibility. The rest of his poorly-reasoned piece only adds evidence of the weakness of his case.
Wednesday, March 30, 2011
Durbin Digs His Hole Deeper
After writing this recent post regarding Dick Durbin's stupid debit card amendment, I happened to see him on CNBC yesterday morning attempting to defend it.
My remarks concerning his lack of experience in the real world really showed. He actually contended that retailers are so competitive that any debit fee savings would be seen in lower product prices at those retailers.
Senator (R-TN) Tom Corker, who actually had a successful business career before entering politics, came on after Durbin to blatantly dispute Durbin's idiotic remarks. Specifically, Corker said that nobody's going to rebate those fees to any consumers. They just increase margin.
Durbin went on to claim that with only two payment systems, it was hardly a 'free market.' Well, Dick, it's one more alternative than having a Senate full of uninformed blowhards just arbitrarily set the damn price, isn't it?
And, as Corker noted, nobody forces retailers to accept credit or debit cards. The choice is theirs, and those that do must think the fees paid for the card transactions are worth the added business or credit risk management.
Either way, Durbin's live remarks were simply preposterous.
My remarks concerning his lack of experience in the real world really showed. He actually contended that retailers are so competitive that any debit fee savings would be seen in lower product prices at those retailers.
Senator (R-TN) Tom Corker, who actually had a successful business career before entering politics, came on after Durbin to blatantly dispute Durbin's idiotic remarks. Specifically, Corker said that nobody's going to rebate those fees to any consumers. They just increase margin.
Durbin went on to claim that with only two payment systems, it was hardly a 'free market.' Well, Dick, it's one more alternative than having a Senate full of uninformed blowhards just arbitrarily set the damn price, isn't it?
And, as Corker noted, nobody forces retailers to accept credit or debit cards. The choice is theirs, and those that do must think the fees paid for the card transactions are worth the added business or credit risk management.
Either way, Durbin's live remarks were simply preposterous.
Monday, March 28, 2011
Dick Durbin's Debit Card Games
Part of the Dodd-Frank bill passed last year that is soon to have serious consequences for consumers was a last-minute, virtually unread provision added by Illinois Democrat Dick Durbin to aid retailers and hurt banks.
Essentially, Durbin's amendment caps the debit transaction fee at 12 cents, which is much lower than current typical fees. I can't personally attest to whether Durbin's campaign funding benefited from the likes of Wal-Mart, Target, et.al., or not. But his amendment clearly distorts what were previously market-determined pricing structure for debit card processing.
Merchants receive major benefits from debit card usage. They don't pay a percentage of revenues as a discount fee which credit card purchases exact. And having customers use debit cards provides instant collection, reduces costs and risks related to the handling of physical currency, and, quite likely, enables more purchases for higher amounts than would otherwise be made with cash.
Why the US Senate needed to step in and set prices for this service is unclear. But that's what Durbin has done.
Now, with the law scheduled to take effect on Friday, people are becoming aware of his actions.
As a Wall Street Journal editorial points out, loss of debit fee income by banks will force them to raise prices on other services. As they wrote,
"Do you like free checking? Enjoy it while you can, because unless you're a high roller you will soon be paying for check-writing privileges. The price controls have also caused banks to deny credit to marginal borrowers- i.e., those with low incomes."
According to the editorial, something like $12B-14B will be lost to banks and accrue to merchants from the new law. But don't expect to see any impact on prices you pay in stores because the merchants pay lower debit card fees.
The Journal piece goes on to identify Senators who voted for this prior to November's election, but now have 'seen the light' and want to reverse it, if only for two years. This includes 17 Republicans.
My point in writing about this is to do two things.
First, to highlight what a nefarious numb scull Dick Durbin is. It's legislation like this which simply has no place in our federal laws and/or Congressional process.
Judge Andrew Napolitano, a contributor on Fox News and retired NJ judge, reminds viewers often that the Constitution stipulates that Congress' laws shall apply to all citizens. It's not supposed to be a special favors shop.
Durbin's gambit is a fine example of why voters have come to loathe and mistrust so many Senators and Representatives. Who in the hell is Dick Durbin to legislate what should be market-determined pricing for debit card transaction fees?
Why do these morons who become Congressional legislators suddenly feel that they know enough about anything to pass laws like this? Certainly, Durbin does not. Care to guess his pedigree?
You might have assumed, as I did, correctly, that his academic background was- law school. Meaning he has virtually no practical knowledge about anything regarding the US economy. But it's much worse than that.
Durbin interned with and apprenticed to one of the lesser lights of Illinois' contributions to the US Senate- Paul Simon. No wonder Durbin has a huge appetite for legislation which contrasts with his apparent non-existent common sense. A chip off the old uber-liberal block of bow-tie Paul, Durbin is essentially a lifer- a professional federal politician. His bio mentions no real work experience between being Simon's staffer, then running for a House seat.
The most vile, despicable breed of Congressional legislator- the lifetime federal hack.
Between ObamaCare, the Dodd-Frank bill, and the EPA's assault on coal, oil and natural gas, It seems there's nothing Washington won't try to legislate or dictate to us anymore.
I guess the silver lining in Durbin's crafty, disingenuous behavior is that it provides such a clear example of what's wrong with Congress.
Essentially, Durbin's amendment caps the debit transaction fee at 12 cents, which is much lower than current typical fees. I can't personally attest to whether Durbin's campaign funding benefited from the likes of Wal-Mart, Target, et.al., or not. But his amendment clearly distorts what were previously market-determined pricing structure for debit card processing.
Merchants receive major benefits from debit card usage. They don't pay a percentage of revenues as a discount fee which credit card purchases exact. And having customers use debit cards provides instant collection, reduces costs and risks related to the handling of physical currency, and, quite likely, enables more purchases for higher amounts than would otherwise be made with cash.
Why the US Senate needed to step in and set prices for this service is unclear. But that's what Durbin has done.
Now, with the law scheduled to take effect on Friday, people are becoming aware of his actions.
As a Wall Street Journal editorial points out, loss of debit fee income by banks will force them to raise prices on other services. As they wrote,
"Do you like free checking? Enjoy it while you can, because unless you're a high roller you will soon be paying for check-writing privileges. The price controls have also caused banks to deny credit to marginal borrowers- i.e., those with low incomes."
According to the editorial, something like $12B-14B will be lost to banks and accrue to merchants from the new law. But don't expect to see any impact on prices you pay in stores because the merchants pay lower debit card fees.
The Journal piece goes on to identify Senators who voted for this prior to November's election, but now have 'seen the light' and want to reverse it, if only for two years. This includes 17 Republicans.
My point in writing about this is to do two things.
First, to highlight what a nefarious numb scull Dick Durbin is. It's legislation like this which simply has no place in our federal laws and/or Congressional process.
Judge Andrew Napolitano, a contributor on Fox News and retired NJ judge, reminds viewers often that the Constitution stipulates that Congress' laws shall apply to all citizens. It's not supposed to be a special favors shop.
Durbin's gambit is a fine example of why voters have come to loathe and mistrust so many Senators and Representatives. Who in the hell is Dick Durbin to legislate what should be market-determined pricing for debit card transaction fees?
Why do these morons who become Congressional legislators suddenly feel that they know enough about anything to pass laws like this? Certainly, Durbin does not. Care to guess his pedigree?
You might have assumed, as I did, correctly, that his academic background was- law school. Meaning he has virtually no practical knowledge about anything regarding the US economy. But it's much worse than that.
Durbin interned with and apprenticed to one of the lesser lights of Illinois' contributions to the US Senate- Paul Simon. No wonder Durbin has a huge appetite for legislation which contrasts with his apparent non-existent common sense. A chip off the old uber-liberal block of bow-tie Paul, Durbin is essentially a lifer- a professional federal politician. His bio mentions no real work experience between being Simon's staffer, then running for a House seat.
The most vile, despicable breed of Congressional legislator- the lifetime federal hack.
Between ObamaCare, the Dodd-Frank bill, and the EPA's assault on coal, oil and natural gas, It seems there's nothing Washington won't try to legislate or dictate to us anymore.
I guess the silver lining in Durbin's crafty, disingenuous behavior is that it provides such a clear example of what's wrong with Congress.
Tuesday, September 21, 2010
Wonderboy's Illegal Appointment of Elizabeth Warren
For a president who promised the most transparent administration in history, the establishment of the newly-created Consumer Financial Protection Bureau and appointment of Harvard professor, lawyer and scold Elizabeth Warren provide evidence that Wonderboy's promise was and continues to be a lie.
The Wall Street Journal's editorial on the subject in this past weekend's edition, Elizabeth III, makes this clear.
Here's how the new bureaucracy has been situation to avoid, at least in the administration's opinion, the necessity of having Warren nominated and confirmed to head it.
The bureau is officially organized to report to the Treasury Secretary, but its head, Warren, will become an assistant to Wonderboy.
According to the recently-passed financial sector regulatory legislation, however, the bureau is actually part of the Federal Reserve, with its budget provided by that entity, rather than an explicit Congressional allowance.
The Constitution is clear that any "Officers of the United States" are subject to Senatorial confirmation. Given Wonderboy's heavy verbal buildup up Warren and her spanking-new Bureau, you'd think she qualifies. But that would mean she'd have to pass muster with the Senate. And these days, even the Democratically-controlled upper chamber isn't considered a rubber stamp for Warren.
And, according to the Journal article,
"On July 21, Mr. Obama signed a bill passed by both Houses stating that the "Director shall be appointed by the President, by and with the advice and consent of the Senate."
That phrase would now seem to have the force of law, thus requiring Warren to be confirmed by the Senate. The Journal editorial ends by observing,
"We have here another end-run around Constitutional niceties so Team Obama can invest huge authority in an unelected official who is unable to withstand a public vetting. So a bureau inside an agency that it doesn't report to, with a budget not subject to Congressional control, now gets a leader not subject to Senate confirmation. If Dick Cheney had tried this, he'd have been accused of staging a coup."
It makes me wonder what might happen if a) Republicans gain control of both Houses and require Warren's confirmation, and/or b) the next president, presumably a Republican, simply leaves the new bureau unled and unstaffed.
This newly-created and ominously-named Consumer Financial Protection Bureau surely is among the most strangely-devised, organized and 'led' of perhaps any ever created in the federal government.
As to its probably effect on the financial sector, more on that in a subsequent post on my companion business blog.
The Wall Street Journal's editorial on the subject in this past weekend's edition, Elizabeth III, makes this clear.
Here's how the new bureaucracy has been situation to avoid, at least in the administration's opinion, the necessity of having Warren nominated and confirmed to head it.
The bureau is officially organized to report to the Treasury Secretary, but its head, Warren, will become an assistant to Wonderboy.
According to the recently-passed financial sector regulatory legislation, however, the bureau is actually part of the Federal Reserve, with its budget provided by that entity, rather than an explicit Congressional allowance.
The Constitution is clear that any "Officers of the United States" are subject to Senatorial confirmation. Given Wonderboy's heavy verbal buildup up Warren and her spanking-new Bureau, you'd think she qualifies. But that would mean she'd have to pass muster with the Senate. And these days, even the Democratically-controlled upper chamber isn't considered a rubber stamp for Warren.
And, according to the Journal article,
"On July 21, Mr. Obama signed a bill passed by both Houses stating that the "Director shall be appointed by the President, by and with the advice and consent of the Senate."
That phrase would now seem to have the force of law, thus requiring Warren to be confirmed by the Senate. The Journal editorial ends by observing,
"We have here another end-run around Constitutional niceties so Team Obama can invest huge authority in an unelected official who is unable to withstand a public vetting. So a bureau inside an agency that it doesn't report to, with a budget not subject to Congressional control, now gets a leader not subject to Senate confirmation. If Dick Cheney had tried this, he'd have been accused of staging a coup."
It makes me wonder what might happen if a) Republicans gain control of both Houses and require Warren's confirmation, and/or b) the next president, presumably a Republican, simply leaves the new bureau unled and unstaffed.
This newly-created and ominously-named Consumer Financial Protection Bureau surely is among the most strangely-devised, organized and 'led' of perhaps any ever created in the federal government.
As to its probably effect on the financial sector, more on that in a subsequent post on my companion business blog.
Wednesday, June 16, 2010
The Mugging of BP by Wonderboy & Co.
It seems to be nearly-official. Wonderboy's administration has mugged BP and extorted a rumored $20B escrow fund to be overseen and disbursed by Democratic party hack Ken Feinberg.
Feinberg last worked to damage private enterprise as the First Rookie's "pay czar," a totally unconstitutional invention used to strong-arm those banks unwise enough to have taken TARP money. Including those forced to take it, such as Chase and Wells Fargo.
As I write this, on day 58 of the BP oil gusher crisis, Wonderboy's scheduled 30 minute meeting with senior BP executives has lasted for over four hours. You might wonder why it took the smartest president in history 57 days to manage to squeeze a meeting with the chairman and CEO of BP into his schedule.
Probably because Wonderboy is a campaigner and speechifier, not a problem-solver. And the BP mess is a problem. Thus, a situation from which to distance himself for as long as possible. Until, that is, the poll numbers have gotten so bad that he has been forced to even give an Oval Office address to explain his dismal, inept performance.
But, back to corporate mugging.
One CNBC guest put it eloquently this morning when he suggested that BP decide how to manage its financial exposure to the Gulf incident, and let investors appropriately set the company's share price in reaction to those management choices.
As I finish this post, the BP officials are speaking after the meeting. Reports now claim that BP agreed to a $100MM initial fund, with the earlier-rumored $20B commitment, and a third party to administer it. The BP chairman has announced the suspension of BP's dividend for the remainder of 2010.
Mugging on a smaller scale, but mugging, just the same. Were BP's rights to continue exploring and producing oil and gas in the US used to intimidate the firm into this settlement? Will we ever know this, if they were?
Time will tell.
But this much is certain. Rather than invite BP to work with the administration early on to stop the oil gusher, clean up the damage, and make arrangements to pay for the costs of these efforts, Wonderboy instead chose to bully, intimidate and generally threaten a private, publicly-held corporation to do government's bidding without appeal.
As a recent Wall Street Journal editorial noted, this is how third world countries operate. Not how the world's companies and investors have come to expect the United States to behave.
Until Wonderboy & Co. came to town.
Feinberg last worked to damage private enterprise as the First Rookie's "pay czar," a totally unconstitutional invention used to strong-arm those banks unwise enough to have taken TARP money. Including those forced to take it, such as Chase and Wells Fargo.
As I write this, on day 58 of the BP oil gusher crisis, Wonderboy's scheduled 30 minute meeting with senior BP executives has lasted for over four hours. You might wonder why it took the smartest president in history 57 days to manage to squeeze a meeting with the chairman and CEO of BP into his schedule.
Probably because Wonderboy is a campaigner and speechifier, not a problem-solver. And the BP mess is a problem. Thus, a situation from which to distance himself for as long as possible. Until, that is, the poll numbers have gotten so bad that he has been forced to even give an Oval Office address to explain his dismal, inept performance.
But, back to corporate mugging.
One CNBC guest put it eloquently this morning when he suggested that BP decide how to manage its financial exposure to the Gulf incident, and let investors appropriately set the company's share price in reaction to those management choices.
As I finish this post, the BP officials are speaking after the meeting. Reports now claim that BP agreed to a $100MM initial fund, with the earlier-rumored $20B commitment, and a third party to administer it. The BP chairman has announced the suspension of BP's dividend for the remainder of 2010.
Mugging on a smaller scale, but mugging, just the same. Were BP's rights to continue exploring and producing oil and gas in the US used to intimidate the firm into this settlement? Will we ever know this, if they were?
Time will tell.
But this much is certain. Rather than invite BP to work with the administration early on to stop the oil gusher, clean up the damage, and make arrangements to pay for the costs of these efforts, Wonderboy instead chose to bully, intimidate and generally threaten a private, publicly-held corporation to do government's bidding without appeal.
As a recent Wall Street Journal editorial noted, this is how third world countries operate. Not how the world's companies and investors have come to expect the United States to behave.
Until Wonderboy & Co. came to town.
Monday, June 14, 2010
A Nasty Surprise Buried Within FINREG
I read this morning's Wall Street Journal lead staff editorial concerning uber-liberal California Democratic Representative Maxine Waters' insanely stupid contributions to the FINREG bill now being hashed out in conference between the House and Senate.
Without going into too many details, Waters' is seeking to enshrine racial and gender preferences both in a new staff position in each region's Reserve bank, to be confirmed by the Senate, and, then, by extension, in the credit allocation policies each Reserve bank will implement.
In a related step, of which I was aware, one of the bills seeks to make the president of the NY Fed an administration appointee, thus removing more independence from the nation's central bank.
The most chilling part of the editorial was the passage citing Bernanke's Fed as instructing the Regional Fed banks to remain silent on Waters' legislation.
As the article noted, the mere appearance of the legislative changes to the Reserve banks in one house's version have been sufficient to muzzle the central bank.
This is not trivial. It's also why we don't want multi-thousand page, or even hundred-page bills being passed. Waters' ideas are toxic and stupid. Their passage will continue the nonsensical preferences with which Congress saddled Fannie and Freddie, to all of our regret and great expense.
This is one part of FINREG that has to be stopped. It wouldn't hurt if Waters could be given a new career, come November, either. That way, at least we'd be safe from her constant meddling in matters of which she displays no ability to actually understand.
Without going into too many details, Waters' is seeking to enshrine racial and gender preferences both in a new staff position in each region's Reserve bank, to be confirmed by the Senate, and, then, by extension, in the credit allocation policies each Reserve bank will implement.
In a related step, of which I was aware, one of the bills seeks to make the president of the NY Fed an administration appointee, thus removing more independence from the nation's central bank.
The most chilling part of the editorial was the passage citing Bernanke's Fed as instructing the Regional Fed banks to remain silent on Waters' legislation.
As the article noted, the mere appearance of the legislative changes to the Reserve banks in one house's version have been sufficient to muzzle the central bank.
This is not trivial. It's also why we don't want multi-thousand page, or even hundred-page bills being passed. Waters' ideas are toxic and stupid. Their passage will continue the nonsensical preferences with which Congress saddled Fannie and Freddie, to all of our regret and great expense.
This is one part of FINREG that has to be stopped. It wouldn't hurt if Waters could be given a new career, come November, either. That way, at least we'd be safe from her constant meddling in matters of which she displays no ability to actually understand.
Friday, June 4, 2010
Krauthammer On The Effects of Environmentalists On Drilling & Accidents
I caught Charles Krauthammer's appearance last night on Bill O'Reilly's Fox News program.
Krauthammer wove together a very sensible, obvious thread which has been, heretofore, overlooked by most pundits.
To wit, he noted that environmentalists have, over time, wrung their hands over potential oil spills close into shores, and, thus, had shallow-water drilling off US coasts banned.
Then there is the ANWR. The greenies have managed to prevent meaningful exploration of that Alaskan land resource, as well.
The result?
BP and other oil companies must venture offshore into deep waters. Over a mile deep. Pushing technological frontiers and operating under unfamiliar conditions.
Rather than let oil companies explore for and pump oil in relatively well-known conditions on land or in shallow waters, we thus have the first major deep water oil spill.
As Krauthammer observes, the environmentalists, ironically, brought this on all of us due to their refusal to let the oil industry tap known, safer deposits.
Instead, we now have a pipe spewing oil a mile down in the Gulf, and no prior experience with how to stop it.
So much for sensible liberal Democratic energy policies and regulation. Hopefully, someone in the GOP will publicize Krauthammer's points and galvanize public opinion behind them, and against the liberals who brought us the policies that created the conditions leading to the BP Gulf spill.
Krauthammer wove together a very sensible, obvious thread which has been, heretofore, overlooked by most pundits.
To wit, he noted that environmentalists have, over time, wrung their hands over potential oil spills close into shores, and, thus, had shallow-water drilling off US coasts banned.
Then there is the ANWR. The greenies have managed to prevent meaningful exploration of that Alaskan land resource, as well.
The result?
BP and other oil companies must venture offshore into deep waters. Over a mile deep. Pushing technological frontiers and operating under unfamiliar conditions.
Rather than let oil companies explore for and pump oil in relatively well-known conditions on land or in shallow waters, we thus have the first major deep water oil spill.
As Krauthammer observes, the environmentalists, ironically, brought this on all of us due to their refusal to let the oil industry tap known, safer deposits.
Instead, we now have a pipe spewing oil a mile down in the Gulf, and no prior experience with how to stop it.
So much for sensible liberal Democratic energy policies and regulation. Hopefully, someone in the GOP will publicize Krauthammer's points and galvanize public opinion behind them, and against the liberals who brought us the policies that created the conditions leading to the BP Gulf spill.
Thursday, May 27, 2010
Tennessee's Bob Corker Tells It Like It Is
Tennessee Republican Senator Bob Corker was all over the news yesterday for standing up to our "duplicitous" president.
In the recent closed-door session with Republican Senators, Wonderboy was bluntly asked by Corker how, to paraphrase the Senator,
'you could be so duplicitous as to sabotage my work on financial regulatory reform, then come here and claim to be open to our ideas.'
Yes, Corker used the word duplicitous.
News reports characterized Wonderboy's reaction as 'think-skinned.'
No kidding. For once not among a carefully chosen group of naive teen-aged college liberals, our First Rookie had to take fair and appropriate criticism from real adults.
I think it's indicative of how arrogant and self-centered Wonderboy is, that he believed that simply by showing up at a GOP Senate caucus and addressing them with his magical tones, they, too, would genuflect in worship to the country's first black president, just because he's black and was elected.
It's never been that way in the US, and there's no reason it should change now. Every president has been mercilessly lampooned and criticized, justly or not.
In Wonderboy's case, of course, it's more than justified. And Corker, more than anybody else of whom I can think, spoke truth to power, expressing the realities of our First Rookie's lies and dissembling in clear, unflinching language.
In the recent closed-door session with Republican Senators, Wonderboy was bluntly asked by Corker how, to paraphrase the Senator,
'you could be so duplicitous as to sabotage my work on financial regulatory reform, then come here and claim to be open to our ideas.'
Yes, Corker used the word duplicitous.
News reports characterized Wonderboy's reaction as 'think-skinned.'
No kidding. For once not among a carefully chosen group of naive teen-aged college liberals, our First Rookie had to take fair and appropriate criticism from real adults.
I think it's indicative of how arrogant and self-centered Wonderboy is, that he believed that simply by showing up at a GOP Senate caucus and addressing them with his magical tones, they, too, would genuflect in worship to the country's first black president, just because he's black and was elected.
It's never been that way in the US, and there's no reason it should change now. Every president has been mercilessly lampooned and criticized, justly or not.
In Wonderboy's case, of course, it's more than justified. And Corker, more than anybody else of whom I can think, spoke truth to power, expressing the realities of our First Rookie's lies and dissembling in clear, unflinching language.
Thursday, May 20, 2010
The Curious Case Of ShoreBank of Chicago
Since stories about large New York financial institutions chipping in to help avoid the closure of a modest bank in Chicago named Shore Bank, I've been wondering what would lead so many titans of finance to help some insignificant little Midwest bank.
This morning's Wall Street Journal provided the likely answer- corruption.
Framing a grinning mugshot-drawing of our First Rookie, the article stated,
"In letters to the White House, the lawmakers questioned whether the big banks are curring favor with the Obama administration at a time when many are under federal scrutiny. The lawmakers also asked whether the White House has been pressuring the big banks to help.
The White House denied putting pressure on bankers."
According to the piece, no less an august person than Lloyd Blankfein
"was personally making fund-raising calls to other banking executives, seeking private-sector pledges totaling $125 million for the failing community-development lender, Chicago's ShoreBank Corp."
Further on in the Journal article, various other denials are noted on the part of administration mouth pieces. They allege that all contact occurred between Treasury, regulators and the bank, not the White House.
Well, sure. I mean, does anyone really think Wonderboy is personally calling Lloyd Blankfein to suggest he help rescue ShoreBank? Or even one of his henchmen?
Everyone's smarter than that. All that need have occurred is for Rahm Emanuel to mention to Geithner that it sure would be a good thing if ShoreBank could be kept open.
I believe in espionage circles, this is what is known as 'using a cutout.'
There's never a direct, traceable link between the highest corrupt official and the people doing the actual questionable actions.
So it is here.
Because if you think Lloyd Blankfein just got out of bed one morning and decided his good deed for the day was to save a small community bank in Chicago, well, Lloyd probably has a few CDO's to sell you, too....
This morning's Wall Street Journal provided the likely answer- corruption.
Framing a grinning mugshot-drawing of our First Rookie, the article stated,
"In letters to the White House, the lawmakers questioned whether the big banks are curring favor with the Obama administration at a time when many are under federal scrutiny. The lawmakers also asked whether the White House has been pressuring the big banks to help.
The White House denied putting pressure on bankers."
According to the piece, no less an august person than Lloyd Blankfein
"was personally making fund-raising calls to other banking executives, seeking private-sector pledges totaling $125 million for the failing community-development lender, Chicago's ShoreBank Corp."
Further on in the Journal article, various other denials are noted on the part of administration mouth pieces. They allege that all contact occurred between Treasury, regulators and the bank, not the White House.
Well, sure. I mean, does anyone really think Wonderboy is personally calling Lloyd Blankfein to suggest he help rescue ShoreBank? Or even one of his henchmen?
Everyone's smarter than that. All that need have occurred is for Rahm Emanuel to mention to Geithner that it sure would be a good thing if ShoreBank could be kept open.
I believe in espionage circles, this is what is known as 'using a cutout.'
There's never a direct, traceable link between the highest corrupt official and the people doing the actual questionable actions.
So it is here.
Because if you think Lloyd Blankfein just got out of bed one morning and decided his good deed for the day was to save a small community bank in Chicago, well, Lloyd probably has a few CDO's to sell you, too....
Monday, May 17, 2010
Regulatory Zeal
I've been following two separate but equally important regulatory actions lately. Perhaps you have been, too.
The first involves Goldman Sachs. This weekend's Wall Street Journal carried a very extensive article detailing Mary Shapiro's rabid pursuit of the investment bank. Shapiro is portrayed as feeling the need to rescue the SEC's image and reputation from the stain of missing the Bernard Madoff fraud.
The other regulatory actions involve the Gulf coast oil spill from the rig hired by BP and partially operated by Haliburton.
In that case, while the regulatory agency is getting a black eye from possibly becoming too cozy with industry firms, our First Rookie and his henchman, Ken Salazar, have wasted no time letting voters know that they consider any and all companies involved to be untrustworthy and generally badly-intentioned entities.
While believing in capitalist economies, I also believe such economies need to be well- and effectively-regulated.
In the case of Goldman, if it can be proven, to the satisfaction of a jury or judge, to have clearly engaged in material fraud of customers, then it should be penalized appropriately.
Regarding the oil spill, recent news stories cast doubt on the management of the drill plugging process on the TransOcean rig leased to BP.
I'd be the first to insist that BP, Haliburton, or whoever the responsible managing firm which may be found to have been inept at handling the plugging be penalized.
But, surely, it would be better for everyone involved were the president to have waited until various investigations had discerned which entity or entities were culpable in the case of the oil spill, assuming it was not simply equipment failure and natural causes.
Then the president could have met privately, first, with that firm's CEO, and taken a more reasoned approach, ensuring the cooperation of the firm in making restitution and reforming their practices.
It does no good for our politicians to simply demonize private entities, especially in advance of due processes finding guilt.
Instead of calm, deliberative approaches to applying regulations to sectors in which business practices are found to be unacceptable, we have an administration which simply engages in thuggery and public accusations before the facts are known and available legal and regulatory processes have been allowed to operate.
This does our society no long term good.
The first involves Goldman Sachs. This weekend's Wall Street Journal carried a very extensive article detailing Mary Shapiro's rabid pursuit of the investment bank. Shapiro is portrayed as feeling the need to rescue the SEC's image and reputation from the stain of missing the Bernard Madoff fraud.
The other regulatory actions involve the Gulf coast oil spill from the rig hired by BP and partially operated by Haliburton.
In that case, while the regulatory agency is getting a black eye from possibly becoming too cozy with industry firms, our First Rookie and his henchman, Ken Salazar, have wasted no time letting voters know that they consider any and all companies involved to be untrustworthy and generally badly-intentioned entities.
While believing in capitalist economies, I also believe such economies need to be well- and effectively-regulated.
In the case of Goldman, if it can be proven, to the satisfaction of a jury or judge, to have clearly engaged in material fraud of customers, then it should be penalized appropriately.
Regarding the oil spill, recent news stories cast doubt on the management of the drill plugging process on the TransOcean rig leased to BP.
I'd be the first to insist that BP, Haliburton, or whoever the responsible managing firm which may be found to have been inept at handling the plugging be penalized.
But, surely, it would be better for everyone involved were the president to have waited until various investigations had discerned which entity or entities were culpable in the case of the oil spill, assuming it was not simply equipment failure and natural causes.
Then the president could have met privately, first, with that firm's CEO, and taken a more reasoned approach, ensuring the cooperation of the firm in making restitution and reforming their practices.
It does no good for our politicians to simply demonize private entities, especially in advance of due processes finding guilt.
Instead of calm, deliberative approaches to applying regulations to sectors in which business practices are found to be unacceptable, we have an administration which simply engages in thuggery and public accusations before the facts are known and available legal and regulatory processes have been allowed to operate.
This does our society no long term good.
Tuesday, April 27, 2010
FINREG Put On Hold
Thank God for small miracles.
Yesterday's attempt by Senate Democrats to rush corrupt retiring Senator Chris Dodd's badly-written FINREG bill to debate and subsequent passage failed, 57-41.
Senate Republican Minority Leader Mitch McConnell succeeded in keeping his party together, and even added Democrat Ben Nelson, in opposition to this mistaken attempt to pass flawed legislation before Congress' own appointed outside panel delivers its verdict on what happened in the financial sector to cause the market crisis of two years ago.
Sometimes, it seems, the right thing does happen in politics. Even in the Senate.
Yesterday's attempt by Senate Democrats to rush corrupt retiring Senator Chris Dodd's badly-written FINREG bill to debate and subsequent passage failed, 57-41.
Senate Republican Minority Leader Mitch McConnell succeeded in keeping his party together, and even added Democrat Ben Nelson, in opposition to this mistaken attempt to pass flawed legislation before Congress' own appointed outside panel delivers its verdict on what happened in the financial sector to cause the market crisis of two years ago.
Sometimes, it seems, the right thing does happen in politics. Even in the Senate.
Friday, April 23, 2010
Wonderboy At Cooper Union
So Wonderboy staged his second coming of Lincoln at Cooper Union yesterday.
Maybe he's turning out to be another Lincoln, after all, but not in the manner he envisioned. There are those who point to Lincoln's suspension of habeas corpus, imprisoning of newspaper editors who didn't agree with his prosecution of the war, and a few other choice violations of Constitutionally-guaranteed rights and freedoms.
In short, some viewed Lincoln as a dictator. Guess Wonderboy is making headway on being the second Lincoln, after all.
Yesterday's speech from the First Rookie, who, to my knowledge, has absolutely no background in, nor understanding of finance, was devoid of any sense of compromise or seeking a generally-agreed best solution for weaknesses in current law governing and structure in the sector.
Instead, as I expected, he simply demanded that Republicans vote for the flawed, dangerously-designed bill that bribed- and grafted-up Senator Dodd (D-CT) has cobbled together to a length of over one thousand pages. In effect, a financial sector version of the largely-unread, incomprehensible health care 'reform' rammed through Congress on a strictly party-line vote.
If Wonderboy truly wanted effective financial sector reform, he'd invite both parties to work together, using public testimony from affected firms in the industry, to write a widely-supported bill. And time wouldn't be an issue.
Why is it this president insists on ramming major, sector-changing laws through Congress without sufficient debate and input, claiming that 'something must be done now?' That any opposition is to total reform, not just his reform?
That's how you know that, with this president, the issue is never getting the best legislation. Instead, it's to get something liberal and accretive to federal power before the November elections limit what a Democratically-controlled Congress can still get away with.
Maybe he's turning out to be another Lincoln, after all, but not in the manner he envisioned. There are those who point to Lincoln's suspension of habeas corpus, imprisoning of newspaper editors who didn't agree with his prosecution of the war, and a few other choice violations of Constitutionally-guaranteed rights and freedoms.
In short, some viewed Lincoln as a dictator. Guess Wonderboy is making headway on being the second Lincoln, after all.
Yesterday's speech from the First Rookie, who, to my knowledge, has absolutely no background in, nor understanding of finance, was devoid of any sense of compromise or seeking a generally-agreed best solution for weaknesses in current law governing and structure in the sector.
Instead, as I expected, he simply demanded that Republicans vote for the flawed, dangerously-designed bill that bribed- and grafted-up Senator Dodd (D-CT) has cobbled together to a length of over one thousand pages. In effect, a financial sector version of the largely-unread, incomprehensible health care 'reform' rammed through Congress on a strictly party-line vote.
If Wonderboy truly wanted effective financial sector reform, he'd invite both parties to work together, using public testimony from affected firms in the industry, to write a widely-supported bill. And time wouldn't be an issue.
Why is it this president insists on ramming major, sector-changing laws through Congress without sufficient debate and input, claiming that 'something must be done now?' That any opposition is to total reform, not just his reform?
That's how you know that, with this president, the issue is never getting the best legislation. Instead, it's to get something liberal and accretive to federal power before the November elections limit what a Democratically-controlled Congress can still get away with.
Wednesday, April 21, 2010
Governing vs. Dictating
First it was healthcare.
Now it's financial services regulation.
Wonderboy doesn't believe in governing. Governing takes time, patience, an openness to the ideas of opponents, and a willingness to arrive at a result that will truly be embraced by a majority. It involves compromise.
Instead, our First Rookie demonizes anyone who disagrees with his preferred bill-du-jour.
You can't oppose his proposal. If you do, as Wonderboy targeted Republican Senators and, in particular, their leader, Mitch McConnell, you are called out to the American people as obstructing any and all 'reform.'
Never mind that those opposing the Dodd bill have legitimate concerns. Dodd's deeply flawed bill allows executive powers over the financial sector that are truly imperial. It enshrines 'too big to fail' so that the currently-large and powerful financial institutions gain advantages under the presumed cloak of government rescue.
There are other flaws, as well.
The point is, just because some dispute that Wonderboy's health care or financial 'reform' bills are, as Candide might judge them, the best possible bills in all the world, doesn't mean they are against all reform of these sectors.
Republicans have offered credible, useful ideas and bills in these areas, but have been ignored by Democrats and, most visibly, Wonderboy himself.
Wonderboy is, by his actions, a dictator. Pure and simple.
He does not govern. He does not wish to govern. He only wishes to dictate.
That's not how our Republic was designed to be.....governed!
Now it's financial services regulation.
Wonderboy doesn't believe in governing. Governing takes time, patience, an openness to the ideas of opponents, and a willingness to arrive at a result that will truly be embraced by a majority. It involves compromise.
Instead, our First Rookie demonizes anyone who disagrees with his preferred bill-du-jour.
You can't oppose his proposal. If you do, as Wonderboy targeted Republican Senators and, in particular, their leader, Mitch McConnell, you are called out to the American people as obstructing any and all 'reform.'
Never mind that those opposing the Dodd bill have legitimate concerns. Dodd's deeply flawed bill allows executive powers over the financial sector that are truly imperial. It enshrines 'too big to fail' so that the currently-large and powerful financial institutions gain advantages under the presumed cloak of government rescue.
There are other flaws, as well.
The point is, just because some dispute that Wonderboy's health care or financial 'reform' bills are, as Candide might judge them, the best possible bills in all the world, doesn't mean they are against all reform of these sectors.
Republicans have offered credible, useful ideas and bills in these areas, but have been ignored by Democrats and, most visibly, Wonderboy himself.
Wonderboy is, by his actions, a dictator. Pure and simple.
He does not govern. He does not wish to govern. He only wishes to dictate.
That's not how our Republic was designed to be.....governed!
Friday, March 12, 2010
Lame Duck Chris Dodd Goes It Alone
Ready for some rich political humor?
Lame ducky Democratic Senator Chris Dodd is attracting all sorts of media attention as he attempts to push a massive, comprehensive financial sector regulatory bill through the chamber.
In an election year, when he isn't even running, having been effectively driven from office by scandals involving his lax oversight of the very sector he presumes to know how to re-regulate, does anyone really believe the pig in question will pass?
It's been criticized for being too sweeping, too naive in assuming that scrambling regulatory chairs will make a difference, and including simply wrong-headed remedies which will, in time, constrict consumer access to credit.
Yesterday, Republican Senator Bob Corker called a press conference to lament that health care issues had supplanted financial regulatory reform in importance. That the bill died a few yards' of consensus.
Dodd then trotted out and declared the bill not to be dead. On the other hand, sources generally reported that the garbage Dodd will present on Monday is not a bi-partisan product.
So let me get this straight. The Democrats now have only 59 votes in a Senate that requires 60 to pass legislation. Dodd is retiring and has no more pull. He's been disgraced by his own inept performance on the Committee he now chairs.
He has no Republican allies co-sponsoring the bill.
It's a tumultuous election year that could quite possibly see both Houses changing party majorities.
And Chris Dodd thinks he has a bill, all on his own, that can pass?
Now, that's funny.
Lame ducky Democratic Senator Chris Dodd is attracting all sorts of media attention as he attempts to push a massive, comprehensive financial sector regulatory bill through the chamber.
In an election year, when he isn't even running, having been effectively driven from office by scandals involving his lax oversight of the very sector he presumes to know how to re-regulate, does anyone really believe the pig in question will pass?
It's been criticized for being too sweeping, too naive in assuming that scrambling regulatory chairs will make a difference, and including simply wrong-headed remedies which will, in time, constrict consumer access to credit.
Yesterday, Republican Senator Bob Corker called a press conference to lament that health care issues had supplanted financial regulatory reform in importance. That the bill died a few yards' of consensus.
Dodd then trotted out and declared the bill not to be dead. On the other hand, sources generally reported that the garbage Dodd will present on Monday is not a bi-partisan product.
So let me get this straight. The Democrats now have only 59 votes in a Senate that requires 60 to pass legislation. Dodd is retiring and has no more pull. He's been disgraced by his own inept performance on the Committee he now chairs.
He has no Republican allies co-sponsoring the bill.
It's a tumultuous election year that could quite possibly see both Houses changing party majorities.
And Chris Dodd thinks he has a bill, all on his own, that can pass?
Now, that's funny.
Thursday, December 17, 2009
Inmates Redesign The Asylum- Barney Frank & Chris Dodd's Bogus New Financial Regulatory Vision
I recently wrote this post discussing the stealth approach that House and Senate Democrats are taking with their financial sector regulatory "reform" bills.
What I didn't adequately touch on in that piece is the very perverse prospect of two of the major architects of the recent US financial services sector's crisis claiming to be capable of redesigning regulatory and related elements to prevent future occurrences of such problems.
Let's recall the facts. Barney Frank personally drove Fannie Mae and Freddie Mac to purchase higher proportions of option ARM, low-doc, no-doc and, generally, poorer-quality mortgages from the private sector. Chris Dodd and fellow Democratic Senator and Finance Committee member Kent Conrad both accepted sweetheart loans from Countrywide, Angelo Mozillo's mortgage finance company, while failing to adequately supervise and rein in the growth of poor quality, often improperly documented mortgage loans. Both also failed to act on Bush administration concerns regarding the explosive growth of Fannie Mae and Freddie Mac through guarantees of bonds backed by the poor quality loans.
Oh, and, by the way, Barney Frank, to my knowledge, has never addressed the contetion that a person with whom he was romantically involved was a lobbyist involved with Fannie Mae. I'm sure it's irrelevant.
Now, these Congressional worthies would have us believe that, having been instrumental in wrecking the residential finance sector and, by extension, the entire US finance sector, they are in a position to tell us how to organize, supervise and regulate the sector in the future to avoid similar calamities.
Nothing could be further from the truth. In fact, they overlook the rather simpler, more obvious solution, i.e., fewer government guarantees and less inept regulation.
If Fed, FDIC, OCC and other regulators had done their job in the first place, Frank's and Dodd's judgemental errors and political favoritism would have been stopped in their tracks. Unfortunately, our vast, overmanned and overly-complicated bank regulatory system failed in its primary mission.
Shouldn't that have triggered a more cold-eyed look at how the current players failed in their regulatory oversight jobs, rather than simply layering on more and more complicated rules, classifications and regulations?
How many people believe that, if someone failed to do their job in the first place, the right solution is to give them increased responsibilities and hope for a better outcome next time around?
Well, evidently, at least two- Frank and Dodd.
What I didn't adequately touch on in that piece is the very perverse prospect of two of the major architects of the recent US financial services sector's crisis claiming to be capable of redesigning regulatory and related elements to prevent future occurrences of such problems.
Let's recall the facts. Barney Frank personally drove Fannie Mae and Freddie Mac to purchase higher proportions of option ARM, low-doc, no-doc and, generally, poorer-quality mortgages from the private sector. Chris Dodd and fellow Democratic Senator and Finance Committee member Kent Conrad both accepted sweetheart loans from Countrywide, Angelo Mozillo's mortgage finance company, while failing to adequately supervise and rein in the growth of poor quality, often improperly documented mortgage loans. Both also failed to act on Bush administration concerns regarding the explosive growth of Fannie Mae and Freddie Mac through guarantees of bonds backed by the poor quality loans.
Oh, and, by the way, Barney Frank, to my knowledge, has never addressed the contetion that a person with whom he was romantically involved was a lobbyist involved with Fannie Mae. I'm sure it's irrelevant.
Now, these Congressional worthies would have us believe that, having been instrumental in wrecking the residential finance sector and, by extension, the entire US finance sector, they are in a position to tell us how to organize, supervise and regulate the sector in the future to avoid similar calamities.
Nothing could be further from the truth. In fact, they overlook the rather simpler, more obvious solution, i.e., fewer government guarantees and less inept regulation.
If Fed, FDIC, OCC and other regulators had done their job in the first place, Frank's and Dodd's judgemental errors and political favoritism would have been stopped in their tracks. Unfortunately, our vast, overmanned and overly-complicated bank regulatory system failed in its primary mission.
Shouldn't that have triggered a more cold-eyed look at how the current players failed in their regulatory oversight jobs, rather than simply layering on more and more complicated rules, classifications and regulations?
How many people believe that, if someone failed to do their job in the first place, the right solution is to give them increased responsibilities and hope for a better outcome next time around?
Well, evidently, at least two- Frank and Dodd.
Tuesday, December 15, 2009
Stealth Passage of the Barney Frank's Financial Regulation Bill
Yesterday morning on CNBC, I heard Wisconsin Republican Representative Paul Ryan remark that Barney Frank had rammed his bloated, misguided bill on financial sector regulatory reform through the House.
It's another one of those huge bills with so many hidden details and bad ideas that few Congressmen probably even know what they passed. It's sure to have loads of unintended consequences.
For example, certain large financial institutions will qualify for treatment as 'too big to fail,' and be subject to a federal government commission to determine if it is in danger of insolvency, and if it should be saved.
Funny, but I always thought that was up to creditors. Or, if it's a bank, perhaps the FDIC.
But some shadowy federal government panel?
What happened to bankruptcy as the normal process for those companies which get into too much financial trouble?
Ryan opined that this bill will abet "crony capitalism." That is, large, bloated financial service firms will make use of the revolving door between industry and government to insulate themselves from failure and buy government accommodation. The smaller banks, Ryan noted, will be hurt because they have to play by the rules without such connections.
You can bet that nowhere in this legislation did Frank allow his own culpability in driving Fannie Mae and Freddie Mac to securitize more questionable mortgage loans to be addressed and, for the future, prevented.
Instead, we will have a bewildering new set of rules for credit provision. Some will put onerous new demands on companies that simply want, as a by-product of their main business, to allow customers to buy using credit.
As Ryan indicated, by using health care as the big distraction, the Congressional Democrats are stealthily redesigning yet another sector of the US economy.
It's another one of those huge bills with so many hidden details and bad ideas that few Congressmen probably even know what they passed. It's sure to have loads of unintended consequences.
For example, certain large financial institutions will qualify for treatment as 'too big to fail,' and be subject to a federal government commission to determine if it is in danger of insolvency, and if it should be saved.
Funny, but I always thought that was up to creditors. Or, if it's a bank, perhaps the FDIC.
But some shadowy federal government panel?
What happened to bankruptcy as the normal process for those companies which get into too much financial trouble?
Ryan opined that this bill will abet "crony capitalism." That is, large, bloated financial service firms will make use of the revolving door between industry and government to insulate themselves from failure and buy government accommodation. The smaller banks, Ryan noted, will be hurt because they have to play by the rules without such connections.
You can bet that nowhere in this legislation did Frank allow his own culpability in driving Fannie Mae and Freddie Mac to securitize more questionable mortgage loans to be addressed and, for the future, prevented.
Instead, we will have a bewildering new set of rules for credit provision. Some will put onerous new demands on companies that simply want, as a by-product of their main business, to allow customers to buy using credit.
As Ryan indicated, by using health care as the big distraction, the Congressional Democrats are stealthily redesigning yet another sector of the US economy.
Monday, November 2, 2009
Modernity vs. Liberal Democrats & Progressives
There were a pair of excellent editorials in recent Wall Street Journal editions concerning how out of step with modern practice and technology in the US.
On Thursday, Daniel Henninger wrote "Obama and the Old Hat People," deriding the liberal Democrat Senate oldsters.
Henninger points out that young American voters thought they were getting a youngish, cool black dude for President, when what they actually got was "old hat" in the form of Chuckie Schumer, Pat Leahy, Chris "Doddering" Dodd and Harry Reid, ol' vinegar himself.
As Henninger puts it so well,
"Our out-dated political software can't recognize trial and error. What ObamaCare is doing with health care' the "public option"- may be fine with the activist left, but I suspect it's starting to strike many younger Americans as at odds with their lives, as not somewhere they want to go. Wait until EPA's ghost busters start enforcing cap-and-trade.
People thought something small, agile and smart was coming to government, but so far it's turning out to be just big-box politics."
Henninger captures an aspect of public disaffection for Wonderboy's evolving political mess and failure that I have yet to see in polls or in the media. That is, the techno-culture of young Americans is very much at odds with the old liberal Senate bulls' view of government control of everything in sight.
Henninger closes with this observation,
"So long as the Democratic Party is the party of the Old Hat People, dependent on public-sector unions with Orwellian names like the Service Employees International Union, it will remain yoked to a pre-iPhone political model that will increasingly strike average everyday American voters as weird and alien to their world."
As it to provide the perfect support to his views, Friday's Journal carried an editorial by Republican Senators Jim DeMint (SC) and Orrin Hatch (U), extolling the virtues of non-"net neutrality."
Their point was simple and clear. Nevermind what the complicated meanings of the term or the proposed regulation entail.
We have a vibrant, free, useful internet and tens of thousands of "apps" springing up for iPhones, texting, etc., on a medium which has been totally free of government intervention.
Why spoil that? How can government "help" improve anything?
They note how the large, blundering entities which are linked to the federal government, like Fannie Mae, Freddie Mac, GM and Chrysler have done recently.
Orrin Hatch is no spring chicken. Yet, he provides a wonderful counterpoint to Harry Reid.
And this editorial, these two GOP Senators, perhaps illustrate the beginning of an awareness that could build among young Americans.
That is, the GOP isn't "against" good things. Rather, it's "against" getting government's messy, slow, cumbersome, dumb hands all over your personal life and so many precious, private, individualistic things about it.
Thus, the GOP approach to health care reform isn't to pass a total redesign of the existing system, with government taking control.
Instead, it's to remove barriers to: tort reform, interstate marketing of health care insurance, mandates, and differential tax treatment of health insurance premiums.
It's a beautiful point. Everyone, especially the new voters who flocked to Wonderboy last year, value and prize their technologically-based freedom and individuality.
How will they like having the Old Hat crowd, with our First Rookie's leadership, take all of that away?
On Thursday, Daniel Henninger wrote "Obama and the Old Hat People," deriding the liberal Democrat Senate oldsters.
Henninger points out that young American voters thought they were getting a youngish, cool black dude for President, when what they actually got was "old hat" in the form of Chuckie Schumer, Pat Leahy, Chris "Doddering" Dodd and Harry Reid, ol' vinegar himself.
As Henninger puts it so well,
"Our out-dated political software can't recognize trial and error. What ObamaCare is doing with health care' the "public option"- may be fine with the activist left, but I suspect it's starting to strike many younger Americans as at odds with their lives, as not somewhere they want to go. Wait until EPA's ghost busters start enforcing cap-and-trade.
People thought something small, agile and smart was coming to government, but so far it's turning out to be just big-box politics."
Henninger captures an aspect of public disaffection for Wonderboy's evolving political mess and failure that I have yet to see in polls or in the media. That is, the techno-culture of young Americans is very much at odds with the old liberal Senate bulls' view of government control of everything in sight.
Henninger closes with this observation,
"So long as the Democratic Party is the party of the Old Hat People, dependent on public-sector unions with Orwellian names like the Service Employees International Union, it will remain yoked to a pre-iPhone political model that will increasingly strike average everyday American voters as weird and alien to their world."
As it to provide the perfect support to his views, Friday's Journal carried an editorial by Republican Senators Jim DeMint (SC) and Orrin Hatch (U), extolling the virtues of non-"net neutrality."
Their point was simple and clear. Nevermind what the complicated meanings of the term or the proposed regulation entail.
We have a vibrant, free, useful internet and tens of thousands of "apps" springing up for iPhones, texting, etc., on a medium which has been totally free of government intervention.
Why spoil that? How can government "help" improve anything?
They note how the large, blundering entities which are linked to the federal government, like Fannie Mae, Freddie Mac, GM and Chrysler have done recently.
Orrin Hatch is no spring chicken. Yet, he provides a wonderful counterpoint to Harry Reid.
And this editorial, these two GOP Senators, perhaps illustrate the beginning of an awareness that could build among young Americans.
That is, the GOP isn't "against" good things. Rather, it's "against" getting government's messy, slow, cumbersome, dumb hands all over your personal life and so many precious, private, individualistic things about it.
Thus, the GOP approach to health care reform isn't to pass a total redesign of the existing system, with government taking control.
Instead, it's to remove barriers to: tort reform, interstate marketing of health care insurance, mandates, and differential tax treatment of health insurance premiums.
It's a beautiful point. Everyone, especially the new voters who flocked to Wonderboy last year, value and prize their technologically-based freedom and individuality.
How will they like having the Old Hat crowd, with our First Rookie's leadership, take all of that away?
Wednesday, October 21, 2009
A Sad Tale of Federal Regulatory Overkill & Thrift Shops
Remember the stampede in Congress to regulate toy imports from China and, then, by extension, regulate the testing and safety of toys sold in the US?
Talk about unintended consequences. I read about this at the time, but didn't really grasp the full impact.
Yesterday I visited a local resale shop to donate some items. One was a piece of clothing one of my children had outgrown. The other was an all-plastic toy.
The toy was an accessory for small metal cars. It was a simulated garage with a few electrically-powered moving parts.
When I spoke to an employee at the shop, she smiled as she took the article of clothing, then simply said,
"Sorry, we can't take the toy."
I somewhat dimly asked why not, and she reminded me that, with the imposition of recent regulations, all second-hand shops had to drop handling toys.
She told me that they can't afford the liability, should someone buy a used toy at the shop and then sue them for violating laws regarding lead, paint, or anything else now prohibited.
I looked at the toy I held, then at the woman. I knew it was useless to appeal that the toy had no paint, because it was obvious that the shop had to simply stop handling toys of all sorts.
Clearly, they had been told by their insurer that it wasn't enough for them to try to discriminate between lawful and unlawful donated toys.
It was safer for them to simply stop taking and reselling any toys.
This seems to me to be a sad state of affairs. In the current economic recession, I'm sure there are quite a few parents who would be happy to find some less expensive toys at resale shops.
But, now, that's impossible. A reliable source of used toys has been shuttered, raising costs to parents who can't necessarily buy new toys for their children all of the time.
How sad that a previously-functioning market for still-usable, used toys has been permanently destroyed by Congress' regulatory overreach.
Talk about unintended consequences. I read about this at the time, but didn't really grasp the full impact.
Yesterday I visited a local resale shop to donate some items. One was a piece of clothing one of my children had outgrown. The other was an all-plastic toy.
The toy was an accessory for small metal cars. It was a simulated garage with a few electrically-powered moving parts.
When I spoke to an employee at the shop, she smiled as she took the article of clothing, then simply said,
"Sorry, we can't take the toy."
I somewhat dimly asked why not, and she reminded me that, with the imposition of recent regulations, all second-hand shops had to drop handling toys.
She told me that they can't afford the liability, should someone buy a used toy at the shop and then sue them for violating laws regarding lead, paint, or anything else now prohibited.
I looked at the toy I held, then at the woman. I knew it was useless to appeal that the toy had no paint, because it was obvious that the shop had to simply stop handling toys of all sorts.
Clearly, they had been told by their insurer that it wasn't enough for them to try to discriminate between lawful and unlawful donated toys.
It was safer for them to simply stop taking and reselling any toys.
This seems to me to be a sad state of affairs. In the current economic recession, I'm sure there are quite a few parents who would be happy to find some less expensive toys at resale shops.
But, now, that's impossible. A reliable source of used toys has been shuttered, raising costs to parents who can't necessarily buy new toys for their children all of the time.
How sad that a previously-functioning market for still-usable, used toys has been permanently destroyed by Congress' regulatory overreach.
Wednesday, May 20, 2009
Wonderboy's New Gas Mileage Requirements
Hearing of the new, tougher gas mileage requirements which Wonderboy signed into law this week, my mind went back to this recent post.
Which of the powers granted to the president in the Constitution do you suppose was the one that covers vehicle gas mileage?
I just looked here, and I can't find it. It's not even in the powers granted to Congress. You could try to argue that the interstate commerce clause allows it, but Judge Napolitano would disagree.
Apparently, back in the day, that is, 1789, 'regulate' meant to assure that commerce occurred, with minimal interference, not to micro-manage every facet of interstate business.
This, then, is the sort of federal legislation that leaves you angry over unconstitutional intrusion into private lives and state authority.
Which of the powers granted to the president in the Constitution do you suppose was the one that covers vehicle gas mileage?
I just looked here, and I can't find it. It's not even in the powers granted to Congress. You could try to argue that the interstate commerce clause allows it, but Judge Napolitano would disagree.
Apparently, back in the day, that is, 1789, 'regulate' meant to assure that commerce occurred, with minimal interference, not to micro-manage every facet of interstate business.
This, then, is the sort of federal legislation that leaves you angry over unconstitutional intrusion into private lives and state authority.
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