Amidst our current economic crisis, the Senate cleared a bill two weeks ago described by Politico as “the most sweeping overhaul of the nation’s financial regulatory system since the Great Depression.” Hidden under the veil of protection for the American people, the bill will amount to endless bailouts due to its lack of regard for the personal responsibilities that should be expected of companies.
Every taxpayer is angry about making the TARP payments and with good reason, but the cause of the financial crisis wasn’t banker greed. It was a combination of misguided policy, crooked politicians and too-low interest rates set by the Federal Reserve – all non-capitalistic practices being blamed on the free enterprise system.
The first problem we should have with this financial regulation bill is that it’s written by Sen. Chris Dodd, D-Conn., a man who received below-market rates on his Washington, D.C., and Connecticut homes from Countrywide Financial, one of failed subprime lenders that led us into the mortgage crisis in the first place. Dodd’s buddy-buddy relationship with Angelo Mozilo, the former CEO of Countrywide Financial, led to the senator being placed on a “Friends of Angelo” list that allowed him to receive the low rates.
In return for the favor, Dodd came out with a plan to help the subprime mortgage lenders survive their bad investments by placing the troubles on the backs of taxpaying citizens. According to the Wall Street Journal, “The Senator’s plan allows mortgage lenders to dump $300 billion of their worst loans on to taxpayers via a new Federal Housing Administration refinancing program.”
To me, that looks like Congress was representing Wall Street, and I refuse to believe Dodd has changed his ways within the past two years.
We already know the bill is meant to regulate the financial industry, but the real question is, to whom is this bill giving the regulatory power? The answer: the Department of the Treasury and the Federal Reserve. We’re giving oversight allowance to the same people who primarily caused the crisis. They should be the ones being regulated.
I mean, look at whom they’ve put in as Treasury secretaries the past few years. Under Bush we had Henry Paulson, the former Chairman and CEO of Goldman Sachs, a company that largely benefited from the 2008 bailout. And now under Obama, we have Timothy Geithner, former president of the Federal Reserve Bank of New York, the central bank that happily printed the bailout money for Goldman Sachs. There’s not one thing about this situation that seems right.
Reach Brian at brian.p.anderson@asu.edu
