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We cannot restore confidence in our economy unless we fully address the root causes of the financial crisis and take definitive steps to ensure that taxpayers are never again forced to pick up the tab for bad bets on Wall Street. The legislation President Obama is promoting, however, does neither of these things and actually makes matters worse.
President Obama talks a big game when it comes to Wall Street, but his newest job-killing initiative would provide the nation's largest financial firms with permanent bailouts ordered and overseen by unelected federal bureaucrats.
Under his proposal, the largest Wall Street firms would become eligible for special treatment, including taxpayer-funded resources unavailable to smaller financial firms. These include exclusive access to a pre-existing bailout fund, a Treasury-backed line of credit and a government guarantee for any debt.
Such perks will benefit the likes of Goldman Sachs, President Obama's top financial contributor during the 2008 campaign and a firm that just happens to be under investigation by the SEC for defrauding investors.
The decision to designate Goldman and other giant banks as "too big to fail" won't be made by taxpayers or their elected representatives. Under the Democrats' plan, a new "Financial Stability Oversight Council" made up of unelected federal bureaucrats — including representatives from the Treasury Department, the Federal Reserve, the CFTC, the FDIC and the SEC — would have absolute power to seize any company and do whatever it wants with it.
That means Washington Democrats would force taxpayers to rely on the same government bureaucracies that were asleep at the switch the last time around. The commissioner of the SEC has warned that "there are no clear limits on the degree of government intervention that could be expected."
This special treatment makes these large firms more attractive to investors than the smaller local banks, widening the gap between Wall Street and Main Street. Local banks will receive none of the perks of the Democrats' permanent bailout bill while being forced to comply with all of its expensive, job-killing mandates — at the worst possible time for small businesses across America.
Of course, the large banks won't mind having their borrowing costs permanently lowered by government intervention. That is exactly how it was with Fannie Mae and Freddie Mac, the government mortgage companies that kicked off the crisis by giving high-risk loans to people who couldn't afford them.
Hoping to meet ambitious growth targets and reap considerable bonuses, Fannie and Freddie executives doubled down on their junk mortgage bet by investing heavily in the derivatives market, sparking a systemwide meltdown.
According to the Tax Policy Center, a Washington, D.C., research organization, nearly half of U.S. households will pay no federal income taxes for 2009. That's up from the Tax Foundation's 2006 estimate that 41% of the American population, or 121 million Americans, were completely outside the ...
Responses to the latest IBD/TIPP Poll suggest that the economy, one-party rule, the health care bill and the ascendancy of conservatism will be the four defining corners of the square in the political game coming in November. The Economy This is the No. 1 issue on voters' minds. The economy is in ...
President Obama castigated Senate Republicans last week for opposing Sen. Chris Dodd's Wall Street "reform bill." Democrats say Republicans' main argument — that the bill won't prevent future bailouts — is false. The bill itself, though, is irrefutable evidence that the Republicans are ...
The recently passed health care legislation was a bonanza for lobbyists representing unions, health care providers, drug companies and anyone connected with health care, but most general business groups were spectators to the battle. The Chamber of Commerce fought the proposals, but those ...
Which allows an American Samoan worker to have a higher standard of living: being employed at $3.26 per hour or unemployed at a wage scheduled to annually increase by 50 cents until it reaches federally mandated wages at $7.25? You say, "Williams, that's a stupid question. Who would support people ...
Posted By: Serfdumb(1480) on 4/21/2010 | 10:55 PM ET
Since the U.S. can no longer afford to pay high rates of interest - the cost to service debt would skyrocket beyond our ability to pay. It is said the Fed / U.S. Treasury proxy institutions like Goldman use interest rate swaps with embedded bond trades to manipulate the rate curve down. We should audit, expose whoever owns it and abolish the Fed if necessary. They influence our Gov't in ways the people have no knowledge of and no say in. Goldman and the like are tools of the Fed & "our" Gov't.
Posted By: Serfdumb(1480) on 4/21/2010 | 10:27 PM ET
Sounds like another example of Obambi promoting big business while further burdening small business. Apparently, it's not the meek that shall inherit the earth, it's the well-connected GEs, GMs and Goldmans.
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