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Obama Seeks More Control Of Capitalism

From an elated Associated Press:

Obama eyes tighter controls on banks, Wall Street

By Jim Kuhnhenn, Associated Press Writer

WASHINGTON – President Barack Obama is ready to roll out an overhaul of the intricate rules and systems that govern America’s troubled financial institutions, proposing the most ambitious revision since the Great Depression…

Unlike the government’s temporary ownership stake in automakers and major financial companies, the regulatory changes set to be announced Wednesday are designed to be permanent. They could result in a major realignment of power and authority among government agencies that set the rules for banking, lending and investing and touch American lives through daily transactions, from credit cards to mortgages and mutual funds…

At issue is a 21st century system of high-stakes swaps and trades, bets and losses where trillions of dollars worth of investment products have grown too intricate for a 20th century regulatory structure.

Imagine today’s financial transactions as an athletic contest where the referees have lost their vantage point. Plays occur out of their sight and fouls go undetected. Some referees halt play while others let it go on.

Even the players have had enough

In devising new regulations and oversight, the administration is looking to address four perceived weaknesses in the current system:

The lack of an all-seeing federal entity to detect institutional stresses that threaten the financial system, and the government’s inability to step in and unwind large institutions before they choke the system. The Federal Deposit Insurance Corp. can do this with banks. But the government lacked the power to do the same with a behemoth such as the insurer American International Group Inc.

— The undercapitalization of large financial institutions. Heading into the financial crisis, too many banks were leveraged with significantly more debt than equity. "If you give people enough leverage, they can lose an unbelievably large amount of their own money and that of their clients," Obama’s chief economic adviser, Lawrence Summers, said last week.

— The emergence of large, lightly regulated markets, such as hedge funds, and of big insurers, such as AIG, without a federal overseer. The administration wants large private investment funds to register with the Securities and Exchange Commission and is weighing the creation of a federal charter for insurance firms.

— Consumers and lenders whose unwitting or reckless credit and borrowing decisions placed families under staggering debts and contributed to the instability of the financial system. Obama is likely to recommend creating a financial services consumer protection body with oversight powers over mortgages and credit cards and other consumer financial products

[L]st week, Sen. Chuck Schumer, D-N.Y., a key player in financial issues, called on Treasury Secretary Timothy Geithner to include a single banking regulator in the administration’s overhaul plan. House Republicans want streamlining, too, but would take power away from the Federal Reserve and the FDIC…

One way or another, the Fed could be a winner in the administration’s plan.

The administration and Fed Chairman Ben Bernanke would like the central bank to be the overarching "systemic risk" regulator, lording over the financial system in search of flaws and weak stress points. Such a role would give the Fed exceptional authority as both the manager of monetary policy and the overseer of the enterprises with the biggest financial footprint in the country, if not the world.

Industry officials now expect Obama and Geithner to propose a system that makes the Fed a supervisor of systemic risk assisted by a council of regulators that would advise the central bank about potential dangers.

Also in the debate is how to handle failing institutions that pose a threat to the entire financial system. The administration wants a beefed up FDIC to carry out that function provided such intervention is triggered by Fed or Treasury regulators…

In a speech Friday to the Council on Foreign Relations, Summers offered the administration’s counterpoint: "Any financial institution that is big enough, interconnected enough or risky enough that its distress necessitates government writing substantial checks, is big enough, risky enough or interconnected enough that it should be some part of the government’s responsibility to supervise it on a comprehensive basis."

More blatant propaganda masquerading as news.

Even the players have had enough.

Sure they have. The people on Wall Street and in money markets everywhere just can’t wait for more government ‘oversight’ and regulation.

Meanwhile, our one party media continues to pretend that the Federal Government was not the major factor behind the current financial crisis.

Consumers and lenders whose unwitting or reckless credit and borrowing decisions placed families under staggering debts and contributed to the instability of the financial system. Obama is likely to recommend creating a financial services consumer protection body with oversight powers over mortgages and credit cards and other consumer financial products.

It was largely the government’s ‘all-sing’ oversight which mandated that banks and credit card companies make bad loans and give credit to people they would otherwise avoid that got us into this.

And it was the same government, in the body of the Democrat Congress, who fought tooth and nail against again reforms.

But let’s put Mr. Schumer (and Mr. Frank and Mr. Dodd) in charge.

What harm can it do?

This article was posted by Steve on Sunday, June 14th, 2009. Comments are currently closed.

17 Responses to “Obama Seeks More Control Of Capitalism”

  1. Rusty Shackleford says:

    Clearly this greedy little prick can never be satisfied. He might as well just start wearing armbands and having rabid speeches about “them Jews”.

  2. proreason says:

    “Consumers and lenders whose unwitting or reckless credit and borrowing decisions placed families under staggering debts ”

    We deserve to be punished. Like Bush, white people, capitalism, America lovers, businessmen, gun clingers and religion clingers, consumers have been reckless and placed black families and other patriotic liberals under staggering debts.

    Fortunately, now we have someone in complete charge who enjoys punishing people for their misdeeds.

  3. wondersz1 says:

    These regulations might be really necessary. If you have large corporations and institutions bolstering the economy of the country (btw not only that of US) and deeply integrated in everyday transactions of people (starting from deposit card withdrawal to taking out a mortgage) going bankrupt, I don’t think anyone would stand aside watching that happen.
    Basically, if we do nothing but pumping millions of dollars into collapsing corporations, we simply prolong their collapse. To change that, we need to change how these corporations are regulated by the state. If that requires better controls (it really does), they should be in place.

    • proreason says:

      “These regulations might be really necessary”

      Probably true.

      All the more reason to have people other than the ones responsible for the mess in the first place planning LIMITED, MEASURABLE, ENFORCABLE, FLEXIBLE new guideline that do not hamstring business, but allow business to operate in a profitable manner, while limiting the now better understood inherant risks.

      Now, what are the chances that the fascist Obamunist administration will be able to do that?

      Personally, I don’t like the criminals re-writing the laws.

    • neocon mom says:

      Please remember that Obama often does the opposite of what he says. Especially when it’s an idea that seems sane.
      Like when he famously said that he would go “line by line” through the federal budget and cut out unnecessary stuff. And of course this was followed by porkulus and the biggest proposed operating budget we’ve ever seen. Then he fires the I.G. for Americorps after he found waste, fraud and duplicated programs.
      I could go on and on of course, (he doesn’t want to take over car manufacturers, banks, he thinks we need to reduce the number of abortions that occur, he believes the 2nd Amendment gives the individual the right to own firearms, just the beginning.)

  4. bousquem says:

    “Unlike the government’s temporary ownership stake in automakers and major financial companies”

    I guess obama and the left have a different dictionary they’re using when definining temporary. Maybe they’ll let go of the companies in a hundred years or after all of them have been driven so far into the ground they are worthless and can’t even be saved with private takeover.

    I have a problem when people are lied to about products and get into trouble that way. But the idea that the goverment needs to control people who are reckless in their financial dealings is absurd. Who’s fault is it if some idiot decides to take out a loan they can never pay back to buy a house they’ll never be able to afford the taxes on let alone actually paying off the actual loan for the house. It seems like the annoited one and his cronies think that it’s the bank’s fault and therefore all the rest of us have to pay for their mistakes.

    • wondersz1 says:

      ‘I guess obama and the left have a different dictionary they’re using when definining temporary. Maybe they’ll let go of the companies in a hundred years or after all of them have been driven so far into the ground they are worthless and can’t even be saved with private takeover.’
      Most likely these companies would go bankrupt long before 100 years. It is without this state support that they would probably be driven into the ground. I don’t think someone including state would want pump in moneys to the private companies with no guarantees that the company can stand up against crisis in the next period.

      Maybe they’ll let go of the companies in a hundred years

      How about a different timeline? After the crisis is over (2-3 years hopefully), I believe we can expect the government stake in those companies reduced and subsequently sold to the private sector investors.

      But the idea that the goverment needs to control people who are reckless in their financial dealings is absurd.

      Entirely agree. Don’t think what Obama wants here is government-budgeted free financial advisory to the reckless. Rather the banks were reckless when the gave credits with no prospective return at all. If they gave 100 ‘low-probability return’ mortgages, waiting for defaulted people to pay it off, that was reckless. The policy really means for banks to become a bit more down-to-earth when giving out long-term credits and accumulate toxic (no-return) assets and then presenting nice-looking reporting charts to state financial agencies.

  5. MinnesotaRush says:

    This is rich …

    “WASHINGTON – President Barack Obama is ready to roll out an overhaul of the intricate rules and systems that govern America’s troubled financial institutions..” … ESPECIALLY after just reading this … “Vice President Joe Biden says “everyone guessed wrong” on the impact of the economic stimulus.”

    More “guesswork”, boys???

    “Imagine today’s financial transactions as an athletic contest where the referees have lost their vantage point. Plays occur out of their sight and fouls go undetected. Some referees halt play while others let it go on.”

    Like Fanny & Freddy, boys???

    “Even the players have had enough.”

    Really??? Would that be those political players like Dodd, Frank, Raines, Emmanuel, o-blah-blah, et al … They’ve had enough, huh. Better check their accounts and holdings – on and off shore!

    Where’s the Constitutional authority for all this??? Oooops .. silly me!

  6. MinnesotaRush says:

    “Obama Seeks More Control Of Capitalism” …

    So .. he found a little left somewhere, ay.

  7. take_no_prisoners says:

    Let’s face it, Obama is a wise guy. He knows how to play fast and loose with the rules and he can usually talk his way out of a tough situation. If he hadn’t gone into democrat politics he would probably be working for some other organized crime outfit and be doing just as well or better.

    • JohnMG says:

      Nice catch, t-n-p……”democrat politics……..some other organized crime outfit.”

      Perfect fit!

    • wondersz1 says:

      If the current supervisory frame doesn’t work, it needs to be changed for a better one. What Obama does is introducing a change in rules of the game. The corporations have failed to stand up the tough times on their own, putting at risk the whole of the financial system. Banks want to make money in a reckless way, accumulating toxic debts as they go. If it really is fine with everybody, why not leave it as it stands now? If we feel we need change, we have it. If we feel different changes are needed, where are the other suggestions?
      I believe what Obama does here is right.

    • proreason says:

      “What Obama does is introducing a change in rules of the game”

      The mess resulted from government intervention in the markets. Period.

      The mortgage industry was the most conservative business in the world for 60 years, then the government forced it to make bad loans, and forced it to spread the risk. The industry complied because it had to and now the government is insisting on a new regulatory framework

      It’s like a rapist telling women how to dress so he doesn’t rape again.

      The regulations needed are restrictions on the government.

  8. proreason says:

    Interesting photo of The Moron. Where’s Mr. Niceguy?

    It must be the lighting. He looks kind of …….evil.

  9. canary says:

    Democracy, Capitalism, are historically bad words to Obama. He’s bitter that both of his fathers’ and theirs capitalized by working with whites. The U.S. Democracy and Capitalism has ruined the world.


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