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Senate Banking Committee Chairman Sen. Christopher Dodd, D-Conn., announces a financial reform package, Tuesday, Nov. 10, 2009, during a news...View Enlarged Image
Financial 'Reform': Sen. Chris Dodd's proposed overhaul would replace the Federal Reserve with a "super regulator" to oversee the banking and financial industries. Will it work? Consider the source.
Along with fellow Democrat Barney Frank, now chairman of the House Financial Services Committee, Dodd, who heads the Senate Banking Committee, has done as much to damage this nation's financial system as anyone — and that includes all the CEOs and subprime scoundrels as well as former Fed chief Alan Greenspan, whom many blame for lax oversight and too-loose credit in the run-up to the meltdown.
What did Dodd do? In recent decades, he and his fellow Democrats created a system of perverse incentives by unleashing the Community Reinvestment Act to force banks to make bad loans, then encouraging Fannie Mae and Freddie Mac to finance the scheme with taxpayer-guaranteed borrowing.
It led to Fannie and Freddie virtually taking over the mortgage industry. It also led to the financial meltdown that began in 2007, from which we're still trying to escape. Now Dodd wants to "fix" what he and his pals broke.
In particular, Dodd's bill would shrink the duties of the Fed. As the Washington Post put it, his plan "would impose the most fundamental change in the Fed's mission since the Great Depression, leaving it responsible for little besides setting monetary policy."
For those who ask "so what?" — let's start with the obvious: The Fed did not create the financial crisis, though it's possible that holding interest rates at a 40-year low for nearly a year in 2003 and 2004 contributed to its severity. No, our system melted down because the banks did what they were told by Dodd and others in Congress: lend money, even when it was financially unwise to do so.
Dodd and other believers in government's omnipotence think regulators can know at all times what's going on in the economy — and control it. They can't. The economy is far too complex — and the temptations to corruption and greed far too great.
As economist Don Boudreaux wrote: "These unavoidable realities of the human condition will result in the One Big Regulator ... injecting into financial markets systematic risks far greater than those that already exist."
Dead on. It will, in short, be worse than what we currently have.
By handing off the Fed's risk-management, consumer-protection and bank-regulation responsibilities to a new super agency, we wouldn't just be shuffling responsibilities — we'd also be fostering the dangerous delusion that all our economic ills require massive new bureaucracies to cure them.
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Posted By: Rosebud(40) on 11/13/2009 | 1:23 AM ET
CONT.& FREDDIE MAC. WHEN BUSH CAME IN HE SAW THAT FNNIE & FREDDIE WERE HEDED FOR TROUBLE & ASKED CONGRESS TO REIN THEM IN BUT HE HE WAS BUTTING BARNEY FRANK, CHRIS DODD & MAXINE WATERS, & LATER OBAMA WHO WERE ALL ON THE TAKE BY FREDDIE CEO FRANKLIN RAINES, FRIEND OF OBAMA. THESE ARE THE SAME PEOPLE WHO CREATED THE PROBLEM WHO SAY HE INHERITED IT FROM BUSH WHEN THEY ALL CREATED THE ECONMY TO CRASH AFTER THE HOUSING BUBBLE BURST DUE TO THE LAX REGULATIONS STARTED BY CLINTON.
Posted By: Rosebud(40) on 11/13/2009 | 1:18 AM ET
IN 1993 BILL CLINTON REINSTITUTED THE COMMUNITY REINVESTMENT ACT & FORCED THE FED TO LOWER CREDIT STANDARDS FOR MORTGAGES SO POOR MINORITIES COULD OWN THEIR OWN HOMES WHETHER THEY COULD AFFORD THEM OR NOT. GREENSPAN WAS FED CHAIR & ANDREW COMO FOR HUD WHO APPROVED THE AFFIRMATIVE ACTION LOANS. THEY WERE PRESSURED BY ACORN. DURING THIS TIME BARACK OBAMA WAS WORKING FOR ACORN AS A COMMUNITY ORGANIZER WHOSE JOB WAS TO SHAKEDOQN BANKS & FORCE THEM INTO LOANS FOR CHICAGO MINORITIES THROUGH FANNIE MAE
Posted By: Judith from Michigan(255) on 11/12/2009 | 9:55 PM ET
So, isn't this the next logical step toward Communism, Fascism, Socialism, Marxism or whatever "ism" describes the total destruction of our system and the installation of a complete govt controlled police state? I'm sure Mr. Dodd fancies himself in charge, of course. The best way to motivate citizens to support the opposition in the next elections is to promise that there will be full investigations of Dodd & Co. for corruption and fraud after they are "Fired" from congress.
Posted By: seine(80) on 11/12/2009 | 9:13 PM ET
Many segments of the malinvestments of the past 100 years are still with us, having been 'papered over' rather than allowed to fail. Mr Dodd's plan won't help, rather it will harm and just perpetuate and entrench the past, poor, economic decisions. The interesting thing is that 2010 is an election year for Chris Dodd and his challenger is none other than Peter Schiff. Could irrelevant be the next occupation for Mr Dodd? Let us help it along.
Posted By: TruthSpeaker(5) on 11/12/2009 | 8:29 PM ET
Dodd should be in prison, not the Senate. Why we keep electing these corrupt egotists is a puzzle to me.
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