Right Thinking From The Left Coast
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The Dodd Bill

How on Earth Chris Dodd, who was neck deep in the last financial crisis, became the guru of financial reform is beyond me.  The man has a spectacular record of failure when it comes to regulating businesses.

It’s been tough keeping up with the debate on financial reform as it rolls.  The Democrats can only scream about evil Wall Street bankers while the Republicans are responding with Frank Luntz talking points.  The media is, as usual, worthless.

Fortunately, Bainbridge has been blogging on it. And today, he linked up Heritage’s 14 Fatal Flaws in the Dodd Bill.  A few choice bits:

2.Provides for seizure of private property without meaningful judicial review. The bill, in Section 203(b), authorizes the Secretary of the Treasury to order the seizure of any financial firm that he finds is “in danger of default” and whose failure would have “serious adverse effects on financial stability.” This determination is subject to review in the courts only on a “substantial evidence” standard of review, meaning that the seizure must be upheld if the government produces any evidence in favor of its action. This makes reversal extremely difficult.

I’m sure this will never be abused.

7. Limits financial choices of American consumers. The bill contains a new “Bureau of Consumer Financial Protection” with broad powers to limit what financial products and services can be offered to consumers. The intended purpose is to protect consumers from unfair practices. But the effect would be to reduce available choices, even in cases where a consumer fully understands and accepts the costs and risks. For many consumers, this will make credit more expensive and harder to get.[4]

This is something the Democrats have wanted for a long time.  They think we’re all idiots and will invest all our money in penguin farms if our shoulders aren’t looked over.  It was for this reason, remember, that they opposed Social Security reform.

13. Allows activist groups to use the corporate governance process for issues unrelated to the corporation or its shareholders. Section 972 of the bill authorizes the SEC to require firms to allow shareholders to nominate directors in proxy statement. Such proxy access turns corporate board elections from a process designed to ensure that each board has a good mix of skills and experience into a popularity contest where the long-term interests of the stockholders become secondary to political agendas or corporate raiders. The process can also be used by labor unions, politicians who manage public pension funds, and others to force corporations to respond to pet social or political causes.

The more I look at this bill, the more I see the pattern we have seen in, for example CPSI, which I talked about in a post this weekend.  It’s a pattern of pretending to protect the little guy while really enriching and empowering special interests.  Heritage breaks down specifically how this bill favors the big corporations over little businesses and how it takes a “one size fits all” approach to regulation.

We need to stop judging legislation by its intentions.  We need to not be stampeded toward passage because we’re under the impression that it will finally get Wall Street under control and stick it to those evil bankers.  We need to actually look at what the bill fucking does and act appropriately.

Let’s not do to financial markets what we did to health care and the auto industry.  Let’s not make the same mistake we made with the Sarbanes-Oxley disaster.  Now is not the time to pass anything that comes down to look like we’re getting something done; now is the time to act carefully, for once.  A good bill passed later is better than a bad bill passed now.

Update: More from Cato on special dispensations within the Dodd Bill.  Again, why is this guy the hero of financial reform when his most significant recent achievement was making sure AIG’s bailout protected high-end salaries and bonuses?  When does he become accountable?

Posted by Hal_10000 on 04/27/10 at 03:05 PM (Discuss this in the forums)

Comments


Posted by AlexinCT on 04/28/10 at 06:01 AM from United States

How on Earth Chris Dodd, who was neck deep in the last financial crisis, became the guru of financial reform is beyond me.  The man has a spectacular record of failure when it comes to regulating businesses.

You may have already answered your own question there Hal. On the left it seems that the bigger the failures and disasters you cause, the more clout you get. Even worse, a complicit media has done the work for Dodd of shifting the blame for the financial crisis and the collapse of the lending/banking industry to those evil people on Wall Street from him, Franks, and the demcorats and their idiotic collectivist policies.

It is not a coincidence that Dodd was the loudest voice, pointed the most fingers, and then demanded to be the one to write the new bill to “regulate” evil Wall Street. It will also not be any kind of coincidence that the next financial collapse – one that considering how things are being done now will come sooner than later - will come right back to “the stupid” in this 1400 page abomination that the demcorats demand a right to vote on without anyone really having read anything in it yet.

Mark my words. Dodd hasn’t given the American people the big screw job yet. He is making sure that the recent collapse will be outdone by the next one with this bill. All the dumb things that the demcorats pushed that set up the industry for the fall are still there. We now have bigger rules around protecting and pushing the stupid, and a guarantee that tax payers will be left footing the bill. Government now will have expanded powers to choose the winers and losers, and the politicians that can do so, will be raking in even more contribution cash as a reward for this expanded power. And Wall Street gets blamed when things go wrong yet again! That’s progressive economics for you. I say WTF?

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