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Fiscal Policy &Team Obama Richard Falknor on 21 Apr 2010 07:02 pm

All Center-Right Voices: Help Stop Obama-Dodd “Reforms”

UPDATE APRIL 22! Nicole Gelinas reveals today in the New York Post “O’s hollow promises: His ‘reforms’ won’t fix finance.”  Readers should eyeball the entire post.

Last January 13, we wrote  – –

Governor-elect Bob McDonnell’s political capital is now substantial. Consequently we suggest that he very publicly urge the Commonwealth’s two senators to join him in a bi-partisan effort to send Obamacare back to the drawing board . . . .

Today Governor McDonnell’s political capital may be somewhat eroded, but he still is in a strong position lead a band of influential citizens very publicly to urge the Commonwealth’s two senators to stand fast against the Obama-Dodd measure known as the ‘‘Restoring American Financial Stability Act of 2010’’.

Across the Potomac in Maryland there are (at least) two GOP primary candidates for governor: former governor Bob Ehrlich and Montgomery County business leader Brian Murphy.  Voters in the Old Line State need to hear from both candidates on Obama-Dodd, as we struggle against the imposition of yet another layer of statism leading to fewer real jobs.

Losing Jobs Through Crony Capitalism

“While the U.S. economy undoubtedly is righting itself from the most severe recession since the 1930s, it is doing so at a glacial pace. Clearly, the burden of public policies that reduce the free use of personal property and retard the unsubsidized risk taking of entrepreneurs are lengthening the recovery process. The real cost of this sluggishness are the millions of unemployed Americans who continue to wait for the return of economic spring and the millions more who hope for a better economic times. The real source of this human cost – the real driver of persistent economic want – is the erosion of our economic freedom caused by these government policies.” Bill Beach – -quoted in today’s Heritage Foundation post “The Crony Capitalist Threat to Our Economic Freedom” (Underscoring Forum’s.)

 John Berlau: “Center-Right Concerns in ‘Financial Reform’ Bill”

John Berlau, chief of the Competitive Enterprise Institute’s Center for Investors and Entrepreneurs, has been tracking the Dodd scheme from its earliest iterations

Here follows prize-winning journalist Berlau’s take on how the Dodd bill raises grave concerns across the center-right spectrum – –

  • Main Street non-financial businesses would be hit with taxation, regulation,and possible nationalization by the Federal Reserve.

The Obama administration puts much stock in the fact that the $50 billion resolution (bailout) fund comes not from general taxpayer funds but fees on ‘financial institutions.’ But putting aside the fact that even taxes on big banks would be passed on to depositors and borrowers, the bill’s definition of financial institution subject to the fee and regulation by the Federal Reserve goes far beyond a bank or stockbroker. 

  • Life, home and auto insurers — such as Geico, Progressive, and State Farm — would be subject to this bailout fund fee even though they already pay into state funds for insolvent insurance companies, and the fee would then be passed on to their policy holders. And the Federal Reserve would have the power to define a ‘nonbank financial company.’ The National Association of Manufacturers and others have warned that ‘manufacturers that engage in routine financial activities as a small part of their main business, e.g., a global manufacturer that manages a foreign exchange trading operation, an equipment manufacturer that provides financing for customers, are concerned that they could be pulled into the systemic risk regulatory regime.’

And because they are a part of this regime, they could be seized — or nationalized — by the Fed under the bill if bureaucrats determine they pose a ’systemic financial risk.’ Recall how the supporters of this bill say in its favor that it would give to the government the same authority to seize financial firms as the FDIC has with banks, and remember the expanded definition of ‘financial institution.’ I don’t know how often this authority would be used, but I don’t really want to find out.”

  • Permanent bailout fund would tax Main Street businesses to pay for failing Wall Street banks.

Although they maintain there is no bailout, Dodd and the administration still claim they need $50 billion to ‘resolve’ failing firms. What do they need all the billions for if the money is not going to the firm? Unless perhaps they want to siphon off the money to their own pet causes such as ACORN, maybe.

As had been said, having this pre-funded bailout mechanism is just an advertisement to engage in risky behavior because the government is ready and willing to bail you out.

And going to the last point on non-financial financial businesses.

  • Proxy access remains and could further empower progressive interest groups — from unions to animal rights — when combined with other provisions.

The bill still has the ‘proxy access’ provisions that would empower union pension funds and other progressives by forcing companies to fund their Alinsky-style campaigns for a company’s board of directors. Combined with other requirements — like a mandated majority instead of plurality standard for voting for directors — this could really enable . . . trouble for ordinary shareholders and encourage corporate directors to cut deals . . . on things like card check, cap-and-trade, and removing conservative media personalities. Recall that some of the PETA resolutions got 3 percent of the vote. This is a very small minority, but in a director election with several candidates — all subsidized due to proxy access — a requirement for a majority vote would give them the same kind of status [that] splinter groups have in a European parliamentary election.”

  • What’s not in the bill: any reform of Fannie and Freddie

“The bill ignores . . . two of the primary causes of the crisis: Fannie Mae and Freddie Mac. They’re bigger than ever, and the Obama administration quietly lifted the $200 billion cap on government backing on Christmas Eve — the ‘Christmas bailout’ — so now taxpayers have unlimited liability for them.

Last week’s Financial Crisis Inquiry Commission hearing also revealed that Fannie and Freddie bought sub primes much earlier than thought and misclassified many of them as ‘prime.’ They held 40 percent of sub prime mortgages in 2003 and 2004, giving them a central role in the bubble.

Yet they also gave money and support to Frank and Dodd, so for some reason this bill — supposedly so urgently needed to prevent the next crisis — totally leaves them alone. I think it’s perfectly reasonable for Republicans and others to say — ‘No ‘reform’ without reform of Fannie and Freddie,’” concludes analyst Berlau. (Underscoring Forum’s throughout.)

A Look at the Darker Side

Seasoned investigator Cliff Kincaid of Accuracy in Media (AIM) revealed yesterday that “Obama’s Wall Street Bill Lets Crooks Escape” – –

“The indictment of Goldman Sachs is as deceptive as the ‘financial reform’ bill that President Obama and the liberals are pushing on Capitol Hill, says Zubi Diamond, author of the blockbuster book, Wizards of Wall Street. Diamond is warning legislators not to fall for the Obama Administration’s claim that the legislation somehow punishes Wall Street for bad financial practices. 

Diamond, who has emerged as a major critic of the unregulated hedge fund industry, says he was not surprised that the Securities and Exchange Commission (SEC) named hedge-fund short-seller John Paulson as a key player in the Goldman Sachs scheme to defraud investors but failed to indict him.

Diamond says that Paulson is being let off the hook because he is a member of the most powerful special interest group working the corridors of power in Washington, D.C.–the Managed Funds Association (MFA). He says the major media are afraid of taking on the MFA, which calls itself ‘the voice of the global alternative investment industry,’ because of its tremendous financial clout.”

Readers will find Accuracy in Media (AIM)’s Kincaid’s entire post disturbing, as well as the provocative AIM post by Zubi Diamond, entitled “The Dodd ‘Financial Reform’ Bill Lets Soros Off the Hook.” 

Author Diamond declares – –

“The bad Wall Street is the hedge fund short sellers. They destroy companies, take away liquidity, destroy investor capital and slow down the economy.

The bad Wall Street, in the form of the hedge fund short sellers, engineered the economic collapse, looted every portfolio that had exposure to the stock market, and blamed George Bush and the Republicans, enabling Barack Obama and his backers, including Soros, to take power.

The hedge fund short sellers, who are members of the Managed Funds Association, are running our government today. They are the ones who authored the Dodd bill. The Dodd bill is punishing the victims of the Hedge Fund short sellers. The Dodd bill is punishing the good Wall Street.

Unless the truth about the role of the MFA in our government policies and regulations is revealed, and some courageous lawmakers free our economic system from their grip, the United States is in for a long time of hurt and possible bankruptcy.” (Underscoring Forum’s.)

It is all very well for GOP governors and gubernatorial aspirants to appoint dirigiste commissions, and promise to cut sales-tax increases. The president’s efforts to “transform” America is not a struggle on another planet – – far from Richmond and Annapolis – – the responsibility for which falls solely on national GOP politicians some of whom may be losing their way.

As NRO’s Daniel Foster reports this afternoon – –

“Some have speculated that the Senate’s renewed taste for bipartisan talks is driven by a dilemma. On the one hand, both sides want to show voters they are ‘tough on Wall Street.’ On the other, both are competing for the lucrative political beneficence of the financial sector, which gave more heavily to Democrats in 2008, but which is seen as now being up for grabs.”

The threats to free-enterprise from the Obama-Dodd initiative are very high. From Tea-Partiers to statewide GOP politicians, we need to be fighting the Obama “transformations.” We cannot just walk away and leave the whole burden of stopping these Obama measures to the 30 or so reliably conservative GOP senators.









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