CANDY CROWLEY (CNN, Sunday): The president says you are being deceptive in describing this bill.
MCCONNELL: Well, Candy ... there is a bailout fund in the bill that was reported out of the Banking Committee, the partisan bill that came out of committee on a party-line vote.
CROWLEY: But that still does not--
MCCONNELL: I don't think that's in dispute.
CROWLEY: But that bailout is funded by the banks themselves, is it not? It is not a taxpayer bailout?
MCCONNELL: Well, Robert Reich, who was Bill Clinton's secretary of labor, says it is a bailout fund.
When Mitch McConnell has to misquote me to find evidence he's telling the truth, he is desperate.
No, Senator, I never said Dodd's finance reform bill contains a bailout fund. The fund in the Dodd bill is a $50 billion liquidation fund designed to keep the creditors of distressed banks from jumping ship so fast they'd cause widespread financial panic before the bank's operations could be wound down. And the cost of that liquidation fund would be paid entirely by Wall Street's biggest banks. So it's not, I repeat not, a bailout fund.
I did write in one of my recent posts that the bill "preserves the possibility that the Fed could launch another bank bailout." That has nothing to do with the liquidation fund. It concerns a different provision of the Dodd bill that gives the Federal Reserve Board authority to open its discount window to healthy banks under its purview in order to protect taxpayers from loss during a major destabilizing event, like the popping of another large speculative bubble. Giving the Fed this authority is an open invitation to the biggest banks to create a destabilizing event in the first place, which is what Wall Street's giants did the last time when they created the giant speculative bubble in home mortgages and related derivatives. That's why I believe it essential to limit the size of all banks - so that none has the market power, alone or in league with the others, to create a massive destabilizing event that will surely require the Fed to bail them out.
The Dodd bill strengthens the biggest Wall Street banks relative to smaller banks, and sets them up to become even bigger. As long as the Fed can open its discount window only to the biggest Wall Street banks, their borrowing costs inevitably will be lower than those of smaller firms because their debt will be safer. (This, incidentally, is also a problem posed by the liquidation fund.) So at a time when we ought to be ought to be trimming the sails of the giants on Wall Street, the Dodd bill puts more wind in them.
Cross-posted from RobertReich.org
But then Reich and others wouldn't have anything to write about.
But then again maybe this is the way we make sure the amedment process takes place.
These big but heads. Either they know or think their followers are too stupid to question them. Please folks show them you know better than to fall for this again.
There is plenty wrong with the dodd bill, as Reich has repeatedly pointed out. But none of those failings is anything the banks and their sock puppet, mitchie, want anyone to be overly aware of since they benefit those same banks. So muppet mitchie has to lie to get stupid americans to come over to goldman's side.
In other words, a robotic, reflexive, ideology-driven dismissal of any facts that contradict your view of the financial sector. Do you even know what a financial derivative is and how and why it's very different from a commodity derivative? Do you have any idea how foolish it is to take regulations that apply to one type and slam them onto a different type?
Yes. It is horribly foolish. As horribly foolish and ideologically driven as the pretense of letting the market 'regulate itself''.
Realistically, it will be remarkable if ANY effective regulation passes through the Legislative branch--considering the army of FSI Lobbyists that have been sent to disrupt the process.
We are on to you.
'Nuff said.
Dave Mason: "Yet the House and Senate proposals extend regulatory rules for physical commodities and stocks to these bank-based products. Wantonly extending commodity-focused regulation to financial derivatives applies the wrong tool in the wrong application. The result would be ineffective regulation damaging everything involved. For instance, commodity and stock futures are normally settled by physical delivery whereas most financial derivatives are settled by cash payments—often over an extended period. . . .
"Applying ill-designed blanket regulation will make financial derivatives more costly, more difficult to customize, and consequently less widely used. Because properly used derivatives reduce rather than increase financial risks, bad regulation will increase rather than reduce overall risk in the economy."
The Democrats' financial reform legislation will further weaken our economy and could very well ensure their defeat in 2010 and 2012.
The "Comprehensive" Problem with Derivaties Regulation
http://www.heritage.org/research/reports/2010/04/the%20comprehensive%20problem%20with%20derivatives%20regulation
These so-called financial instruments are convenient abstractions--regardless
of whether the Derivatives serve any useful purpose, the FSI profits on the transaction.
The Client, as we will likely see in the Goldman Sachs investigation, is an afterthought--
the bottom line of the FSI firm in question is all that matters.
We are on to you.
And just exactly how does the legislatlon "further weaken our economy"? You seem informed but offer no evidence for your prediction. Is it something you read in the "internets"?
Why is Obama imposing yet another layer of regulation on derivatives that had nothing to do with the financial meltdown and that are very different from the few derivatives that were involved in the meltdown? And why is he imposing rules for one type of derivative on a very different type?
Many of Americas problems can ONLY be solved by severing the financial umbilical cord that connects K Street lobbyists to members of congress. You can't serve to masters as McConnell has shown. To that end this is my solution:
Give lobbyists a choice.
1) If you wish to lobby any member of the federal government all conversations must be recorded verbatim, and placed into an online database that can be easily accessed by the public.
2) If you don't want to abide by #1 you don't do business with the federal government.
3) Any violation of 1 or 2 is a criminal federal offense punishable by a fine and a prison sentence.
This might seem too extreme for some but it's really not. These people affect every aspect of our lives from baby food to bombs. It's our right as American citizens to know what deals THEY'VE made that WE have to live by.
A suggestion by an old friend who was an elected official after he did time.
He noted how relatively benign conditions were for the so-called non-violent inmates. Practically a country club-- and that's not much of an exaggeration.
But, he said, put those bloodless upper management types in with hardened criminals and the white collar crime rate would plummet.
G Bush Sr "No one will lose a nickel"
So, he borrowed 140 Billion on 40 year securities.
FDIC covered only $50,000.
All over 50,000 was a Bailout.