White House loves and a handful of Republicans will support. The White House will adore
the media coverage this bill will generate because it looks like they actually did something
to correct the financial meltdown caused by the Goldman Sachs's of the world. It will force
the Republicans to either vote for it or look like they are in Wall Street's pocket. For once,
a bi-partisan bill will emerge which looks like Washington got something done. Not!!
Despite all the weeping and gnashing of teeth by the financial industry, this legislation
essentially leaves Wall Street untouched in all the major areas that were crying out for reform.
Banks will still remain too big to fail. They will still be able to gamble with saver's money
and investor's money without risking their own salaries or bonuses and the ratings agencies
will still be paid by the banks to rate financial instruments ignoring an ongoing conflict of
interest. Equally disturbing, the bill shows Congress has taken sides with the White House,
a side not responsive to the average gum-chewing American tax payer.
What is the purpose of Wall Street? Is it to maximize profits for its investors or is it
to lend money and special seed capital to nurture and grow businesses which will employ
Americans and grow the economy? As it's currently configured, Goldman Sachs, J.P. Morgan,
and others exist solely to make all the money they can whether a single job is created or not.
If you look at all the exotic investments they created, few if any were contrived to incubate
new companies or industries. Most of what the credit default swaps, derivatives, and various
other toxic products did was open more avenues for risky speculation. Speculation is merely
a nicer word some use to justify gambling. Wall Street has always been and continues to be
the world's largest casino. The problem is that they've stopped using house money; now they
are using our money. Our pension money, our savings, and the equity in our homes are what
fuels this newest round of criminally contrived theft. The analogy would be to go to Vegas and
sit down at a black jack table and if you win, the casino requires other gamblers to pay your
debt while the owners of the casino take their cut but are never at risk. If you lose, and happen
to know the casino owners, you get your money back. If you think this is the proper function
for Wall Street, fine. The fact is, the game is no longer "honest". If you fail or screw up, you
go out of business and you and your partners take the loss.
As they stand today, even after this bill passes, the big banks will still be too big to fail,
they will still be able to gamble with your money and get their bonuses even if they lose; and
if you choose to get in the game, you will have no idea if their products will balance the risk
because you can't trust the referee (the ratings agencies). And all that money transferred
between the winners and losers isn't creating a single job on Main Street; it's a rigged
redistribution of wealth with the sole purpose of favoring the most cunning and keeping
plenty of people employed on Wall Street.
Politically, this is a big win for Obama and the Democrats. They look like they stood up
to Wall Street. They forced the Republicans into a corner. Republicans voting for this bill
will dilute their ability to attack incumbents in Washington next November. Their "yes" vote
means they can't claim nothing got done or government has no business regulating the free
market. If Republicans oppose this bill, they will surely get hammered in November for
attempting to shield Wall Street and selling out Main Street. It's a political no-win situation
for Republicans. The problem is that while politically this will boost Obama's stock, it won't
prevent another financial meltdown. We taxpayers are still on the hook. It's as if the Energy
and Commerce Committee announced new legislation to prevent future oil spill disasters in
the Gulf, but the legislation did not mandate better blowout protectors, safety standards,
comprehensive disaster plans, or an increase in the amount of liability oil companies must
accept before they can drill.
This is not a partisan issue. Both the Democrats and the Republicans get millions of
dollars in political contributions from the financial industry. If you ever thought Congressman
Barney Frank (Massachusetts) was a liberal populist, you can forget you ever heard that.
Frank fought to protect derivatives and hedge funds. He fought to water down the Volcker
Rule which would keep banks from gambling with shareholder's and investor's money. The
Volcker Rule would have forced partners in these big firms to gamble with their own money.
Frank and Democratic Senator Chris Dodd fought to protect the Federal Reserve's power by
limiting congressional oversight. They also protected the ratings agencies. (Warren Buffett,
a key Obama advisor, owns a big chunk of Moody's Ratings Service.) The bottom line is that
when given an opportunity to change the culture and practices of Wall Street, when offered
a chance to reform practices which didn't create jobs, didn't make America stronger, and left
taxpayers on the hook to bail out the industries, when given a chance to put back the firewalls
erected by Roosevelt in the 1930's which were designed to keep another depression from
occurring; Washington niggled at the edges, made some cosmetic repairs, but left the system
which almost destroyed the country intact. Washington sided with the free market capitalists
and against those who wanted more regulation, greater transparency, and to shut down the
casino. It's business as usual in Washington, D.C.
White House Chief of Staff Rahm Emanuel is quoted as saying "...a crisis is a terrible thing
to waste". You will hear a lot in the next few weeks about all the hard work, heavy lifting, and
grueling negotiations which went into producing this bill. You will hear how Washington
stood up to Wall Street. The President will tout a new consumer protection agency and other
"benefits". At the end of the day, will there still be banks and insurance companies too big
to fail? Yes. Will Goldman Sachs and others still be able to gamble and pin the losses on
investors and taxpayers? Yes. Will you be able to trust ratings issued by Moody's or Standard
and Poors about the risk an investment represents? No. Is oil still pouring out of the well?
Yes. Will this current environmental disaster prevent an equally bad or worse devastation
in the future? No. Is there any doubt who Washington represents when it comes to money,
finance, Wall Street, and big business? No. Was there really a question about that? This
crisis continues to be simple window dressing in the great drama of Washington politics.
As Deep Throat once said, "...follow the money". What do you think? I welcome your
comments and rebuttals. Please send them to lionoftheleft@gmail.com
