This should be a sublime moment for conservatives. democrats are in a full civil war. They are screaming “Obama abandoned us!” and Pelosi is shrieking “This is blackmail!” Maxine Waters is telling colleagues not to be “intimated” by Obama. The left’s base says Obama has sold them out. Pelosi is “enormously disappointed” in Obama. Obama and Biden are burning up the phone lines trying to get the bill passed. It doesn’t get any better than this. I’d love just pour another glass of wine, smile and make some popcorn.
But I can’t. Elizabeth Warren is right. If they don’t change the bill, it should die.
The deal breaker certainly isn’t the goring of the IRS. That’ll be great. The whole thing should be burned to the ground, everyone fired and the IRS completely defunded. The IRS has degenerated into nothing more than a political weapon for the DNC. It has zero credibility. So what is the bogey?
I do not much like Dodd Frank. Dodd Frank is destroying small banks and making big banks bigger. Thre’s more here. That’s really unfortunate and I have a close friend who works in a small bank and he has echoed this sentiment. But Dodd Frank wasn’t all bad. One of the lynchpins of the financial collapse was the lack of regulations on derivatives.
Economic bubbles are not recognized by those inside of them, and the entire Western world has become quietly trapped inside the largest economic bubble in history. The global financial crisis that began in 2008 has been attributed to sub-prime mortgage lending and mortgage backed securities (MBSs), such as collateralized debt obligations (CDOs), which were revealed as toxic assets. While the root cause of the financial crisis is assumed to have been the residential real estate asset price bubble, the underlying systemic risk, and the primary reason for the “too big to fail” doctrine whereby governments were compelled to save financial institutions at any cost, lies in over the counter (OTC) derivatives. The suspension of the US Financial Accounting Standards Board (FASB) mark-to-market rule in 2009 preserved the value of bank balance sheets, i.e., of their mortgage portfolios, but what was of far greater importance was that it prevented triggering the conditions of thousands of OTC derivatives contracts, such as credit default swaps (CDS), that would have wiped out virtually all of the largest banking institutions in the world.
Bill Clinton refused to regulate derivatives in the advice of Robert Rubin and Larry Summers. That was a gigantic mistake. Dodd Frank did produce regulation of derivatives, but now big banks want a major provision rolled back:
Opposition to the funding deal began to surface early Wednesday morning as lawmakers began sorting through the surprise provisions tucked in the more than 1,600-page funding package.
While several controversial policy riders were quickly discovered, it was the change to Dodd-Frank that generated the loudest outcry.
The provision would no longer require that big banks separate trades in financial derivatives from traditional bank accounts, which are backed by the government through the Federal Deposit Insurance Corporation (FDIC). The derivatives played a key role in the financial collapse.
What that means is the Goldman Sachs wants to gamble big and make you pick up the check if they lose instead of paying with their own money. This cannot happen. It must not happen. Bailing out the recklessness of the large financial institutions was monumentally costly to the US. It’s been estimated at $12.8 trillion.
Barack Obama pushed hard for Dodd Frank so asking why he would support a partial dismantling of it seems curious but there are a few ways to look at it. One, nothing Obama says on day means a thing the next day. Two, Obama had done the bidding of big banks since he’s been in office and his policies have permitted bug banks to flourish. Three, if the GOP is ready to pass a budget continuing the government then opposing the bill puts Obama and democrats in the ironic position of being the ones in favor of shutting down the government.
Damn. It hurts to say it, but in this case Elizabeth Warren is right. Let Goldman Sachs gamble with its own money.