Fight Financial Regs
By Dick Morris
TheHill.com
The Republican Party is showing some starch by standing up to Harry Reid
on the financial regulation bill. We can only hope they keep it up.
The Obama administration is selling a bill of goods inside the Beltway by
saying that the GOP is getting into bed with the worst of Wall Street by
opposing its bill. The truth is that the rest of the country fears big
government a lot more than they fear big business and recognizes that
Goldman Sachs and the other Wall Street giants feed at the Democratic trough
as much or more than at the Republican one.
Republicans just need to keep pointing out that Goldman was the
biggest donor to the Obama campaign, contributing $970,000 from its
employees and PACs. (The combined donations of the staff and faculty
of the University of California totaled $1.5 million, but they are
hardly a coherent corporate entity like Goldman).
The
financial regulation bill is a disaster in three major respects:
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1. It gives incentives for irresponsibility by, in effect, guaranteeing
banks' survival by establishing a $50 billion rescue fund. In doing so, it
gives the large banks a huge advantage and extends to them the same kind of
implicit guarantee that once encouraged the likes of Freddie Mac and Fannie
Mae to go on their lending spree. It is a key step in the conversion of big
banks into quasi-public institutions, ultimately controlled by the
government, levers through which the public sector can control the private.
2. By vesting the secretary of the Treasury with the power to seize --
in a hostile takeover -- any financial institution he deems too big to fail,
it puts at risk of public takeover every such company in the nation.
Granted, the FDIC now has the power to seize any bank. But the FDIC is
headed by a nonpartisan board with a heritage of nonpolitical regulation.
The secretary of the Treasury is an arm of the president. If a political
appointee has the power to take over any financial institution -- bank or
non-bank -- fire the board, replace the management, wipe out stock equity
and sell off pieces of the company, it gives him a power that is so awesome
it can undermine our democratic freedoms. What corporate executive will feel
free to donate to Obama's opponents or to speak out against the
administration when doing so could cost him his job and his bank?
3.
The newly established Consumer Financial Protection Agency will have the
power to approve or reject any loan instrument offered by any company in the
land. A mattress company that wants to let customers go 60 days before
paying will have to get CFPA approval before extending credit. The
bureaucratic bottleneck will slow economic activity, encourage corruption
and retard consumer spending. It will be big government at its worst.
The entire political premise of the Obama administration's efforts to
pass this bill is flawed: Republicans will not be blamed for protecting the
banks if they vote down this bill. Voters will not believe that the GOP is
in cahoots with Wall Street. They will understand that the Republicans in
Congress protected them from the massive growth of government.
Obama's power-grabs have been so frequent and so blatant that he has no
credibility on this subject. Voters expect him to be fighting to grow
government and to be hostile to private enterprise. And they are wise to his
close connection with Wall Street despite his occasional forays into
populism.
This is a bill the Republican Party can kill with political
impunity, and hopefully they will have the courage to do so.