History records that the money changers have used every form of abuse, intrigue, deceit, and violent means possible to maintain their control over governments by controlling money and its issuance. – James Madison
Now it’s the government’s turn – but this ain’t your founding fathers’ government. – The Monster
So what’s up with Barney Frank’s, “let’s kill off private enterprise especially in the area of financial institutions” freight train. What happened to “we are trying on every front to increase the role of government” mantra? What happened to the “shareholders will be wiped out” with a look of glee in his eye? Anybody want to comment on the possible reasons behind Barney slowing down legislation to control the financial sector in new and less productive ways, or are these going to be a series of bills that are voted on in the dead of night on Christmas Eve?
Is there something more important that Barney really needs to attend to? I wonder what that could be?
Now granted, I can use the extra time to finish reading Barney’s Financial Stability Discussion Draft ,which has gone from 253 pages to 379, with all those un-American and anti-capitalist goodies in it, but I am still darn curious as to what is slowing down ‘ol marxy.
Rep. Barney Frank (D-Mass.) on Tuesday said the House would vote on a wide-ranging financial overhaul no earlier than the first week in December.
Frank, the chairman of the House Financial Services Committee, said that as part of the overhaul he is pursuing policies that would grant the federal government broad powers to break up large, troubled financial institutions and would curb the Federal Reserve’s power to prop up specific firms.
The Senate has yet to mark up any of the legislation, and most analysts predict that Congress will not send the president a bill to sign until 2010.
Senate Banking Committee Chairman Chris Dodd (D-Conn.) is drafting legislation behind the scenes, and an administration official said on Tuesday that the Senate is not far behind the pace set in the House. Dodd publicly has taken several positions that differ from the administration and Frank, most notably that he is in favor of the consolidation of the nation’s four banking regulators. The administration official said the Dodd language under discussion is an encouraging start.
Frank is currently weighing one of the thorniest aspects of the overhaul, a measure that would give the government new powers to regulate systemic risk and break up failing financial institutions that threaten the wider economy.
Treasury Secretary Timothy Geithner has said that “resolution authority” is one of the most important pieces of the overhaul. That paired with legislation that creates a new “systemic risk council” will be considered in markups that will likely last until the end of November, Frank said.
Referring to the 1930s-era Glass-Steagall Act, which prohibited banks from doing both commercial and investment bank business, Frank said he could see the new systemic risk regulator imposing “Glass-Steagall institution by institution.”
The Federal Reserve is designated in the legislation as the main regulator to oversee large, systemically important financial firms.
That would allow the government to break up institutions and reduce them by size or other measures. “The systemic risk regulator, I believe, will be given explicit mandates to step in when there is a troubled institution,” Frank said.
Separately, Frank struck a tough tone on the scope and power of the Federal Reserve. Throughout the crisis, the central bank relied on legislation dating back to the 1930s granting broad powers to the bank in “unusual and exigent” circumstances.
Once again, what you see and what you get a two completely different animals. I will explain it all in the upcoming post about the FSIA.
If you would like to see all the drafts for just financial regulatory reform that Barney is working on right now, go here.