Well Regulated BS

The solution to the financial crisis, we are told by some of the brightest and best, is more and better government regulation. But as long as the regulators are tied down, tied in knots, and hamstrung by politicians who are legally bribed by those that are supposed to be regulated -- a better regulations fix is at best an illusion.

Hedge funds, banks, mortgage lenders, and most recently Freddie and Fannie, are supposed to be prevented in the future from doing in millions of homeowners, and sticking the tax payers with trillion dollar bills -- by new regulations. For instance, "There's nothing bad or wrong with broker deposits; we just have to be sure as regulators that they're used in a safe and sound manner" (Scott M. Polakoff, CEO of the Office of Thrift Supervision). And "We look forward to ... working with the Treasury, members of Congress, and regulators on reforms that will enhance the competitiveness of the US economy and maintain the delicate balance between appropriate regulation and the need for a more flexible and efficient system of financial supervision" (Rob Nichols, President of the Financial Services Forum). Also "The Federal Reserve today has adopted regulations implementing the Homeowners Equity Protection Act, passed in 1994...[which] will make the problem of irresponsible lending far less likely in the future" (Barney Frank, House Financial Services Committee chairman).

Regulators, however, do not work in a vacuum. They enforce regulations set by Congress or various commissions, which are thinned out, if not gutted, by politicians who received major donations from guess whom? Hedge funds, banks, and mortgage lenders, Freddie and Fannie. The Wall Street Journal reports that the housing industry has given more than $95 million in donations to politicians such as Christopher Dodd and Richard Shelby (the ranking members of the Senate Banking Committee), and House Financial Services Committee chairman Barney Frank. Moreover, as the New York Times reports, these firms hire the relatives of politicians and even the fine folks themselves, once they tire of living off the public trough: "They have hired many officials who have worked for the last two administrations alone. Fannie hired Jamie Gorelick, a former deputy attorney general in the Clinton administration; Thomas E. Donilon, who was that administration's chief of staff to the secretary of state; and Franklin D. Raines, who was President Clinton's budget chief."

Moreover, regulators need staff and computers and other such resources. Thus another way Congress has to keep them from doing their job is putting them on a much reduced budgetary diet. And not hiring new staffers, when some retire. And jumping down the throat of those whistle blowers who speak up and tell one and all that the regulators are a bunch of lap dogs, kept on a short leash.

In short, if you want to rein in some of worst facets of capitalism, the guys and dolls who do not mind throwing people out of their homes, who sell people mortgages that these speculators know people will not be able to pay, you must start with the politicians. As long as politicians can take money from the industries that are supposed to be regulated, tax payers will keeping paying for the profiteering of these industries. If these tax payers are not willing to vote for a mandatory full public financing of elections -- which works well in Britain for instance -- they should not blame anyone else for being fleeced, short changed, and kicked out of their homes.

Amitai Etzioni is a Professor of International Relations at The George Washington University. He is the author of several books including My Brother's Keeper and From Empire to Community: A New Approach to International Relations. He can be reached at [e-mail]

Comments

[outnow]

Abolish the Fed. Create a system of government credit, not a monetarist, fiat currency. The secrets of the Federal Reserve should be exposed. One must read the history of the Fed to begin to understand the problems in banking. Our country's history began in disputes over "central banks," as in Europe. Andrew Jackson, William McKinley, and JFK wanted to get rid of the Fed. Ron Paul does, too.

There have been many attempts to rid our country of these central bankers. The Fed is unconstitutional. It is not a "federal agency" but private bankers.

We must start there to even discuss reform of our financial system let alone our political system. It is sad to see Dobb and Frank groveling before the moneyed interests that pay their campaign financing.

[HeevenSteven]

The people who go to the polls need to be informed, and this is the crux of the problem. They think watching and listening to the corporate media is going to take care of that.

[SteveL]

Let’s put the blame where it belongs. This time the financial industry pushed for de-regulation and got it. On the surface you would think the people who run these financial institutions would be somewhat more reliable than a street thug after your wallet. No such luck. These executives who are already wealthy wanted to game the system for even more riches then hand the bill to the taxpayers. Oh yeah and scream for lower tax rates for themselves in the process. Those who ran these financial institutions are nothing more than economic pirates and should be treated as such.

[tiredandworried]

Maybe we need to amend the Bill of Rights. How about this?

A well regulated Economy, being necessary to the Security and Prosperity of a free State, the right of the People to keep and invest Money, shall not be infringed.

[joebhed]

How about this?

"Only the Congress shall have the right to coin (create) money, to regulate the value thereof (maintain price stability), and of foreign coin (direct management of exchange rates).

Article 1, section 8 of our existing, un-Amended Constitution.

What we need is a monetary system that concurs.

[dgscol]

The decline in the price of oil signals the beginning of the end of the struggle
over oil with Asia. The bankers are acknowledging that the American public does
not want to divest in the US and invest in Shanghai.

The mortgages were being used as instruments to keep this investiture going, and now
this Sorosian scheme has blown up, leaving a mess in its wake and some sympathetic
Congressmen.

Looks more and more like America is interested in new high tech industry, and an end
to this swindle.

God Bless the USA

[Halsey]

The idiocy of how this could happen is mind-boggling. The company I work(ed) for was bought by a huge bank..whic­h now is in the press every friggin day...stoc­k dropped 75% in one year...and when one looks at how these morons loaned money, spent money...on­e is left shaking her head in disbelief.

I'm a stockbroke­r...don't like too much regulation; BUT...time and time again, we see that greed and hubris seem to be inherent in many in the financial and banking industries­..so..I say..regul­ate the HELL out of us (them)...g­et some asses in PRISON..so there are CONSEQUENC­ES...(not just..oh..­I have to sell one of my yaghts)...­Obama's administration will, hopefully, clean this mess up...and then, of course, it will happen again in 10 years give or take..but we need 10 years to get out of this mess..befo­re getting into another one...

[research]

Hopefully, our memory is improving.

[Pdubya]

people miss the target. the only "regulating" needed is to put the most complicit out of business: the federal reserve. these people issue money to lobby-whoring congress and we get corporatism, not free market capitalism. we haven't had that in eons. if congress had to be made accountable to the issuance of money and it had to be monetized to a commodity, we wouldn't have a fraction of the lobby interests, no bursts and bubbles like we see today, and we would once again become a savings based economy rather than debt based.

hell, the two largest REGULATED mortgage loan banks are now asking the american people if they can apply for a loan.

i agree what the egregious actions have been, but i think many fall short on the approach to the solution. get rid of sarbane-oxley, stop lobby with money, and get rid of the most complicit in all of our constitutional erosions - the federal reserve.

"allow me to control and issue a nation's money and i care not who writes its laws!" amshell rothschild

no amount of regulation will fix our economy. we can not grow ourselves out of this one folks. what we need is invasive surgery to rid us of our economic cancer. eliminate the federal reserve by re-legalizing our constitution on monetary policy. whoever has the money first, wins. so, lets put the money back into our hands, we the people, and we will become a free and
nation again.

[research]

"REGULATED" like you and I have to obey street signs.

They are private companies.

"President Lyndon Johnson took Fannie Mae's debt portfolio off the government balance sheet; Fannie Mae was converted into a publicly traded company owned by investors. Two years later, Freddie Mac was launched, primarily to keep Fannie Mae from functioning as a monopoly. It went public in 1989. "

http://www.time.com/time/business/article/0,8599,1822766,00.html

[joebhed]

Left ON !

[researcher]

reagan's genius

he still has 30 years later folks advocating the same theories

while the have mores smile all the way to the bank

the greatest plan in the world to wipe out most of the middle class

the genius part much of that same middle class lined up to vote for reagan

talk about self destruction

[Pdubya]

if you apply reagan principles to a commodity based monetary system, it works.

but what we did is apply a supposed "free market" model to corporatism frameworks and loopholes. our fiat monetary system was fertile ground for the chickenhawks to abuse the system.

if one understands how money is issued, by whom, and who gets first dibs on it, then we'd see that reaganomics would have worked alot better IF we had followed our constitution. but we didn't.

he was a puppet. the neocons won and their equally complicit plutocratic partners in the dnc are helping them reign in the new world order.

think on it! the two largest REGULATED mortgage loan companies are now applying to the american people for a loan. and we're going to LET the congress get away with it and let the federal reserve get MORE power. hell, we're even going to let an international regulator in on the deal.

hello brave new world, glad you have such cowardly sheep to shepherd!

[letsgetsmart]

I agree that public campaign finance would be a good place to start but only if the networks who use our airways accept a limit to what they can charge and also set aside time. These are our airways after all and they are using them to make a profit so it is only reasonable that they contribute to our democratic process. I also think that we should do a complete revamp of the voting process. Every vote should be cast using the same system and with a guaranteed paper trail. Voting should be on a weekend with standard hours every where. Federal laws should be passed that over ride state law on the procedures for excluding some voters. None of this free lancing lists that pop up in some areas. We are all citizens and we should all have the same opportunity to be citizens. Once this is in place it should be a lot easier to deal with regulatory agencies, although who would have thought that we would put the government in one parties hands and they would be such crooks. Considering that the previous administration balanced the budget and left us a surplus and a good economy I understand why some would be attractive to hire.

[Godfearing]

In a time of the Iraq-Afghanstan wars, consumer uncertainty, and the
U. S. National Debt reaching $10 trillion, MICHAEL W. HODGES'
detailed 'ECONOMIC REPORT" is a must read by all free thinking
Americans looking for financial trends facing the United States.
The complete report can be found at:

http://mwhodges.home.att.net/

[joebhed]

I'll soon read it, and this is just a suggestion.

We have a funny way of looking at debt.

We see the amount of our debt in "nominal" terms. It's the amount we borrowed, rather than the amount we owe.

I lend you $1,000, and you agree to pay me back $3,000.

How much is your debt.

Nominally - $1,000.

Actually - $3,000.

The public debt of the taxpayers of this country being $10 TRILLION sounds, well, only sufferingly difficult.

The Debt-Servi­ce-Costs(D­SC), that is, what we have agreed to pay back to the holders of that debt, and therefore our direct taxpayer liabilities, are PROBABLY around $25 TRILLION.

One hedge-fund Austrian-school blogger describes these debts as:
"more paper than our economy can ever pay back--given the size of the economy, it just does not compute."

All new money coming into circulation begins as private debts, so we need to create three times More Debt than our ACTUAL debts of $25 TRILLION just to pay back what has gotten our present standard of living. Without buying another box of cheerios.

If you can wrap your mind around the fact that ALL of that new money will begin as debt, then you begin to see the failure they are trying to prevent.

We need a government­-originati­ng debt-free money system in this country, and we need it now. The Chicago Plan presented to FDR proposed such a system.
It s long overdue.

Monetary Transformation Now !

[Herrington]

Corruption is nothing new and neither is responsible governance. That is why careful attention must be paid to consequences. If a company has contributed heavily to a politician for favorable treatment, it is not free speech, period. It is bribery. And the law should err in favor of that view.

No one citizen or even horde of them can monitor the private workings of a private company. It is a trust given to overseers. If those overseers then fail to oversee, they are to be dismissed. In China they shoot them. In America they retire to the Grand Caymans.

[joebhed]

How about a really well regulated banking system where the bankers actually get to lend out THEIR OWN money? Or at least their own money and the money of their depositors?

Those banks would take their depositors money, pay a small interest rate, and lend that money at a higher interest rate to somebody who needed the money and promised to pay it back.

That's how the banking side of the money system should work for all of the money supply that is in circulation.

The new money to be created every year would be created by the federal government of the people of the United States of America. These are the taxpayers responsible for all of these debts of their government, which are going in huge quantities to private individuals and their bancorporations.

Instead, the government would spend directly into circulation all of the new money that is required to maintain the economy and prevent inflation.

No, Sir, Mr. Etzioni, we do not want another round of regulation and restoration of the corrupt private debt-money-creation cabal known as the Federal Reserve System. This system is the cause of our problem.

Its time has past. .Wake up, America. Creating money should be no one's business but our own.

We want to put an END to that cycle of bubbles and insolvency.
The so-called business cycle.

Monetary Transformation Now.

[ReasonIsMyReligion]

Howzabout we let pro athletes pay the refs and umpires whatever they want?

Fans would no longer be burdened with umpire and ref salaries. Ump and ref salaries would go up.

What could possibly be wrong with that?

[research]

We could start with new lays that clearly state:

Money IS NOT free speech.

Corporations DO NOT have the same rights as persons.

[ReasonIsMyReligion]

Double amen.

[Herrington]

Triple.

[PublicAdvocate]

Ending "Corporate Personhood" is one of Ralph Nader's top issues, however it is not shared by JM or BO. While they might make some cosmetic changes to the tax code and offer rhetorical initiatives to change the status of corporate influence, these will largely amount to empty promises. Why? Because both BO and JM have gone over to private financing of their campaigns and will owe favors to their corporate investors if they become president. How long has McCain been railing against corporations buying influence, yet takes money from them for his campaign?
The media gives him a free pass on this hypocracy.
Ralph Nader on the other hand takes no corporate donations/­contributi­ons/fundin­g and hence is free to act on behalf of the American public before doling our corporate socialism favors.

[joebhed]

I agree completely and support Ralph Nader.

But we should not be duped into another round of Glass-Steagall as the fix for the corrupt private banking cabal with the title Federal, and whose control over our economy and our government is maintained by its powers to create money out of nothing.

Ralph will not get elected.

All he can really do is ensure that the populist progressive dialogue is maintained at even the faintest level within our political dialogue.

He needs a plank of meaningful monetary reform to be included in his platform.

And the Chicago Plan makeover by the group at monetary.org has it all laid out in proposed legislation.

We need to start thinking about the fact that the future CAN NOT look like the past, not a makeover, not a meaningless reform, not a regulated bunch of private money criminals.

It's OUR money.

The United States of America.

A sovereign country of free people.

The FED was created by the pen of 1913.

Abolish it.

Monetary Transformation Now.

A revolution by the pen of today.

[lisakaz2]

They would be to place regulating outside the hands of party politicing but of course these businesses will whine and unlike John Q Public will be indulged.

It has to be shown that it is IN THEIR OWN INTEREST to be regulated, but as long as we socialize their risky vetures, they'll know no such interest. A Gordian knot, for sure.