Financial Reform Reshmorm – What a Mess

The Senate passed financial reform legislation. This bill, to become law, will have tremendous reach on all of us, regulating everything from ATM machines to Wall Street traders. At this time, it’s impossible to truly discuss the entire bill intelligently since it’s more than 2,300 pages long and I haven’t read it yet. Just like most people did not read the health care legislation, including our legislators, yet had strong feeling about that law; people will have strong feelings about financial reform too, yet no real information to base those feeling on. Note, I did read the health care bill and plan on reading the financial reform legislation.

What I can tell you about financial reform is that it will expand government. It will create new, larger bureaucracies. Forget about too big to fail. The Bureau of Consumer Financial Protection will be too big to accomplish anything. With their wide sweeping powers, they will have the ability to take over companies – maybe even small businesses – for reasons that they will not need to substantiate. Industry will continue to be mired in regulation.

Goldman Sachs settled with the SEC for being accused of misleading investors in a mortgage backed securities investment. They paid $550,000,000 – the largest settlement ever. Spin: the government is proud of this settlement and claims they showed Goldman Sachs that it cannot act in a misleading manner. Goldman Sachs is laughing out loud. Now even larger bonuses can be paid to its bankers; and, Goldman Sachs’ stock was up 4.4% in trading yesterday.

Companies and private investors are hoarding cash. More people live paycheck to paycheck than ever before. Banks own more equity in our homes than we do. Bankruptcy filings are at their highest level (other than 2005 when bankruptcy laws changed) than ever before. It is taking the unemployed longer to find a job than ever before. The last thing our country needs is more legislation.


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