Obama is expected to sign the reform bill next week.
Please consider the following from Mish’s Global Economic Trend Analysis…
To fully appreciate how amazingly good this piece of legislation was, we must look at the pluses (what the bill accomplished), the minuses (objectives the bill failed to meet along with any damages done), and the critical issue (reasonable expectations as to what the bill might have accomplished). Let’s start with the minuses.
Financial Reform Minuses
- Glass-Steagall: Paul Volcker supported provisions that were hopelessly watered down, so much so that they can accomplish nothing. This was a complete failure.
- Derivatives Reform: Banks successfully lobbied for derivative exceptions big enough to drive the planet Jupiter through. They succeeded. Derivatives reform is meaningless.
- Too Big To Fail: The reform bill did absolutely nothing to rein in the widely recognized “too big to fail” policies of the Fed. This was a complete failure.
- Preventing the Last Crisis: There is not a single thing in the bill that can possibly be construed to have prevented the last crisis. This was a complete failure.
- Preventing the Next Crisis: There is not a single thing in the bill that can possibly do anything to prevent the next crisis. This too was a complete failure.
Financial Reform Pluses
- None. The bill accomplished virtually nothing.
Now you might be asking yourself why Obama’s Financial Reform bill is being considered a stunning success. Mish compares this financial reform bill to Obama’s Healthcare Bill. The Healthcare Bill actually hurt the economy, and will continue to do so as long as it remains in effect. It will also lower the quality of our healthcare and cost us more to access it.
The Financial Reform Bill, by contrast, did nothing. It did nothing to reform the financial markets and did nothing to hurt the economy…making this bill a stunning success. As Mish summarizes, “Given the absolute best we could ever expect out of a major piece of legislation supported and promoted by Obama is nothing, and given that nothing was accomplished with no major detriments making matters much worse, the financial reform bill must be considered a stunning success.”
I completely agree. As long as Obama continues to pass bills to wild fanfare and lots of airtime and soundbites that effectively do nothing positive, OR NEGATIVE, we should all be astoundingly happy.
Categories: Economy, Government Failures
The financial reform law is oriented to protecting consumers, which is good, and cleaning up future spills, which is also good, but what about the very existence of the institutions deemed too big to fail? That is, what about their market/political power? The law leaves them to widen the loopholes.