{"id":370,"date":"2010-03-11T11:31:00","date_gmt":"2010-03-11T16:31:00","guid":{"rendered":"http:\/\/www.intuitiveinvestor.com\/web\/?p=370"},"modified":"2018-08-21T08:59:51","modified_gmt":"2018-08-21T12:59:51","slug":"financial-overhaul-bill","status":"publish","type":"post","link":"https:\/\/jasonapollovoss.com\/web\/2010\/03\/11\/financial-overhaul-bill\/","title":{"rendered":"Financial overhaul bill"},"content":{"rendered":"

Christopher Dodd, a Senate\u00a0Democrat from Connecticut and chairman of the Senate Banking Committee, is set to introduce the Senate version of a financial overhaul bill passed in the House of Representatives in December.\u00a0 Dating back to some of the original postings I made on this blog, in order for there to NOT<\/strong> be another financial crisis of similar proportion to the one that the U.S. and the World experienced over the last two years there are three things that have to change:<\/span><\/p>\n

1.\u00a0 The Institutions that got us into the mess have to change<\/span>
\n2.\u00a0 The people of those Institutions have to change<\/span>
\n3.\u00a0 There have to be new ideas that prevent such a thing from happening again<\/span><\/p>\n

I am very sorry to report that there has been almost no progress on any of those three fronts.\u00a0 However, Congressional Democrats are trying to address numbers 1 and 3, above.\u00a0 Unfortunately, there is a lot of hue and cry from Republicans, the financial industry and from some corporations against the legislation.\u00a0 I have detailed the proposed legislation in previous posts and will not reiterate the details.\u00a0 However, I want to point out several things that I feel are important.<\/span><\/p>\n

First, most of the proposed legislation is simply a restoration of legislation that was originally put into place back in the 20th Century’s Great Depression.\u00a0 Most importantly was an act known as Glass-Steagall which maintained a separation between the activities of commercial and investment banks.\u00a0 This legislation was systematically gutted during the Presidential Administrations of both Bill Clinton and George W. Bush.\u00a0 Had Glass-Steagall continued to exist it is very unlikely that the recent recession would have been as deep, and have lasted so long.\u00a0 Despite the fact that separating the two major components of the financial industry protected the U.S.\u00a0for ~80 years, and shortly after its dismantling the economy had a financial crisis, most Republicans don’t support this aspect of the proposed bill.\u00a0 The argument is that a separation would potentially hamper economic growth.\u00a0 C’mon, that is outright ridiculous.\u00a0 Just put the success of Glass-Steagall on a scale with the scale of no Glass-Steagall and see which one comes out ahead.<\/span><\/p>\n

Second, the U.S. financial system has evolved new ways of conducting business that are not effectively covered by current legislation.\u00a0 In particular, hedge funds which control a disproportionate amount of capital have minimal disclosure requirements.\u00a0 If we want to have a financial regulatory structure in the United States, how can we honestly say that we don’t want those regulatory agencies to have transparency into it?\u00a0 That’s like saying we want a police force, but only if they are all partially blind.\u00a0 Duh!<\/span><\/p>\n

Third, the Republican, financial industry and corporate arguments always talk about the hampering of growth of any government intervention.\u00a0 But government is not just charged with provided a regulatory environment for growth – it is also charged with the responsibility to mitigate and offset risk.\u00a0 The financial industry is especially hypocritical in this regard because\u00a0almost every\u00a0member of a financial institution (except maybe janitorial services) knows that investors are supposed to manage both return and risk<\/span>.\u00a0 For too long in our society the magic anti-government solvent has been to say that too much legislation chokes off growth.\u00a0 I have no problem with choked growth if that means that there are no financial catastrophes.\u00a0 Heck, even businesses accept lower profits when they pay for insurance of their key executives, properties, and equipment.\u00a0 Isn’t a good legislative environment for the financial industry\u00a0just a form of insurance?<\/span><\/p>\n

I could go on.\u00a0 But I consider opposition to the financial reform bill to be,\u00a0in the long-run, both anti-capitalist and anti-American because it jeopardizes the U.S. economy’s ultimate health.<\/span><\/p>\n

Jason<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

Christopher Dodd, a Senate\u00a0Democrat from Connecticut and chairman of the Senate Banking Committee, is set to introduce the Senate version of a financial overhaul bill passed in the House of Representatives in December.\u00a0 Dating back to some of the original postings I made on this blog, in order for there to NOT be another financial […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","footnotes":""},"categories":[3],"tags":[],"class_list":["post-370","post","type-post","status-publish","format-standard","hentry","category-the-blog"],"_links":{"self":[{"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/posts\/370","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/comments?post=370"}],"version-history":[{"count":0,"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/posts\/370\/revisions"}],"wp:attachment":[{"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/media?parent=370"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/categories?post=370"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/tags?post=370"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}