Thursday, March 26, 2009

Will Big Money And Crazy Right Wing Ideology Prevent Effective Regulation Of The Financial System?


This morning Tim Geithner faced a seemingly much less pissed-off House Financial Services Committee. His appearance was preceded by big media pieces on his plans to work with Congress to re-regulate a financial system run amuck-- run, in fact, into a ditch... and dragging the rest of us in with it. Both the Washington Post and the NY Times went with page one stories on Geithner's "sweeping oversight plans." Banksters, their congressional handmaidens-- remember, Big Finance spent over $5 billion dollars in the last 10 years to capture the U.S. government and to make sure what Geithner is proposing would never happen-- and lockstep right-wing ideologues are gearing up for a battle to the death. Obama will need Congress behind his plans in order to enact them. The Post:
The Obama administration's plan, described by several sources, would extend federal regulation for the first time to all trading in financial derivatives and to companies including large hedge funds and major insurers such as American International Group. The administration also will seek to impose uniform standards on all large financial firms, including banks, an unprecedented step that would place significant limits on the scope and risk of their activities.

And as the Times puts it, hedge funds and traders of exotic financial instruments, the very people Geithner is proposing to regulate, are "now among the biggest and most freewheeling players on Wall Street," are screaming bloody murder over any kind of supervision. I can't wait to hear the Paul Ryan-Michele Bachmann clown show try making the case about how successful they've been and how they only need the markets to regulate them. Basically, Geithner said that his proposals are needed to prevent a repeat of the excesses that devastated the country's financial system and plunged the entire global economy into, at best, a recession. If a financial institution is "too big to fail," society needs to protect itself and make sure it doesn't. I wouldn't expect someone like Michele Bachmann to understand that; it's hard to believe her partner-in-crime from Wisconsin doesn't.
The government would have the power to peer into the inner workings of companies that currently escape most federal supervision-- insurance companies like the American International Group, multibillion-dollar hedge funds like the Citadel Group and private equity firms like the Carlyle Group or Kohlberg, Kravis & Roberts.

If regulators decided that a company had become “too big to fail,” as was the case with A.I.G. in September, they would subject it to much stricter capital requirements than smaller rivals and much closer scrutiny of its borrowing levels and its trading partners, or counterparties.

But the most striking new proposals, and the ones that may provoke the most heated opposition from the industry, would regulate so-called private pools of capital-- hedge funds, private equity funds and venture capital funds-- and the gigantic market in financial derivatives, including instruments like credit-default swaps, the insurancelike instruments that allow investors to hedge against bond defaults.

Hedge funds and private equity funds manage money for wealthy individuals and institutions like pension funds. They operate almost entirely outside the regulation of either the Securities and Exchange Commission or the Federal Reserve.

Under the administration proposal, hedge fund, private equity and venture capital fund advisers would for the first time have to register with the S.E.C. They would be required to provide the government-- on a confidential basis-- information on how much they borrow to leverage their investments as well as information about their investors and trading partners.

I wonder if Bernie Madoff can lobby against this from his prison cell. It would have ruined his whole business! It was not unexpected that the hearings would kick off with one of Wall Street's worst shills, Scott Garrett (R-NJ- $1,156,599) making a case-- a weak one of course-- against regulation. The man truly is a sociopath. Imagine if a man like Dennis Schulman was sitting there instead of a bribe-taking lunatic like Garrett! Blue Dog David Scott (D-GA- $1,136,104) followed Geithner's explanation of what he's trying to do by bringing in strong regulations-- and proved that Democrats can easily be just as stupid as Republicans-- and just as supine before Wall Street. He didn't know that hedge funds aren't regulated. What's wrong with this guy? He certainly shouldn't be on the House Financial Services Committee-- if even in Congress at all.

Alan Grayson has taken less money from the FIRE sector ($18,468) than any member of the House Financial Services Committee. In fact, Alan Grayson has taken less more from this bankster sector than any other member of Congress! Yet his exchange with Geithner today was probably more valuable to the smooth functioning of the financial system than anyone else speaking up this morning. It's worth watching-- and it tells you something about the kinds of candidates Blue America endorses and supports. It's worth watching Grayson questioning Geithner:

UPDATE: But Max Baucus... Now He Gets Plenty Of FIRE Dough

Baucus (D-MT), chair of the Senate Finance Committee, has scooped up more bankster money ($4,633,243) than anyone in Congress other than John McCain (R-AZ- $32,423,813), Chris Dodd (D-CT- $13,238,806), Chuck Schumer (D-NY- $12,834,746), Joe Lieberman (I-CT- $9,981,924), Arlen Specter (R-PA- $5,753,310), Miss McConnell (R-KY- $5,013,778), Lamar Alexander (R-TN- $4,847,225), and Kay Bailey Hutchison (R-TX- $4,685,238). And if you don't think he's been worth the investment, then you haven't followed the career of Max Baucus. Why only today-- probably reacting to this threatening OpEd in the Wall Street Journal-- he introduced legislation to extend both Bush tax cuts for multimillionaires. Now, how about that in the middle of a populist surge concerning the rich ripping off the taxpayers? Sounding exactly like any Republican shill for the wealthy, Baucus said, with a straight face, that “Allowing these tax cuts to expire would mean a drastic increase for tens of millions of American families." Baucus has no intention of letting Evan Bayh steal the limelight away from his own efforts on behalf of the billionaires and multimillionaires.

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