(10 am – promoted by ek hornbeck)
This morning, Treasury Secretary Henry Paulson formally announced his grand scheme to use America’s economic mess to consolidate power in the hands of the few, the economic pillagers at the Federal Reserve.
Under the guise of “increasing” regulation, Paulson’s scheme seeks to abolish the last vestiges of New Deal oversight on the U.S. economy and complete the deregulation of Wall Street. Paulson proposes nothing less than economic shock therapy to the U.S. financial sector. As The Guardian notes in its coverage of Paulson: “Big banks saw little to fear in the blueprint.”
In its coverage, The New York Times reports Treasury rolls out overhaul of financial regulators.
The administration’s proposal will do almost nothing to regulate the alphabet soup of sophisticated financial products that have fueled the current financial crisis. And it will not rein in practices that have been linked to the mortgage crisis, like packaging risky loans into securities carrying the highest ratings.
Hedge funds and private equity firms, which have enjoyed freedom from government oversight for years, would finally fall under federal watch. But that oversight would be minimal, enabling the government to do little beyond collecting information until a wide scale financial crisis has already occurred…
Mr. Paulson has worried that any effort to substantially tighten regulation could hamper the ability of American markets to compete with foreign rivals – and, in fact, the proposal stemmed from a series of policy discussions that began well before the current tumult that has rocked the nation’s economic underpinnings.
The plan began last year as an effort by Mr. Paulson to streamline the different and sometimes clashing rules for commercial banks, savings and loans and nonbank mortgage lenders.
Streamlining is code for deregulation and, of course, Bush has “urged Congress to quickly approve the proposed changes.” The scheme unveiled by Paulson today has been long in the making. Last year, The American Prospect ran an article about Paulson’s Deregulation Mission. Their proposed solution is to “dismantle much of what’s left of New Deal financial regulations and some of Sarbanes-Oxley.”
Paulson, the former Goldman Sachs chairman, and his fellow Wall Street plunderers give a “self-serving argument that too much regulation hurts the U.S. financial markets was used by another former Goldman co-CEO and U.S. treasury secretary, Robert Rubin, to help kill Glass-Steagall, the 1933 act that prevented conflict-of-interest behavior within the walls of financial institutions.” Make no mistake, Paulson and his cronies seek to loot what little is left to take from America’s economy. Their Trojan horse of increased “regulation” is designed to make the looting that much easier. Or as Paul Krugman explains in his column today:
The Bush administration, however, has spent the last seven years trying to do away with government oversight of the financial industry. In fact, the new plan was originally conceived of as “promoting a competitive financial services sector leading the world and supporting continued economic innovation.” That’s banker-speak for getting rid of regulations that annoy big financial operators.
To reverse course now, and seek expanded regulation, the administration would have to back down on its free-market ideology – and it would also have to face up to the fact that it was wrong. And this administration never, ever, admits that it made a mistake…
So, will the administration’s plan succeed? I’m not asking whether it will succeed in preventing future financial crises – that’s not its purpose. The question, instead, is whether it will succeed in confusing the issue sufficiently to stand in the way of real reform.
Let’s hope not.
Hear, hear. The Democrats in Congress must stop Paulson’s deregulation scheme dead in its tracks. The Bush administration used the 2001 recession as the shock to win $1.3 trillion in tax cuts for the wealthiest 1% of Americans. They used the shock of the September 11th terror attacks to undo Americans’ civil liberties and to start two unwinnable wars in Asia. Paulson’s scheme has been years in the making and the Bush administration has been waiting for a disaster, likely of their own making, to use as an opportunity to ram it through an unsuspecting, easily duped populace.
It’s time for the Democratic Congress to cry foul. America cannot afford any more disaster capitalism.