White House Seeks New Power to Keep Markets Stable

From The New York Times: White House to Seek New U.S. Power to Keep Markets Stable

The Bush administration will propose on Monday that Congress give the Federal Reserve broad authority to oversee financial market stability, in effect allowing it to send SWAT teams into any corner of the industry or any institution that might pose a risk to the overall system.

The proposal is part of a sweeping blueprint to overhaul the country’s hodge-podge of regulatory agencies, which many specialists say failed to recognize rampant excesses in mortgage lending until after they triggered what is now the worst financial calamity in decades.

I think this is precisely what Naomi Klein warned about in her book, The Shock Doctrine. I suspect the Bush administration is going to try to use the shock of the collapsing economy to quickly deregulate the entire economy to make it easier to loot.

More from the NY Times article:

According to a summary provided by the administration, the plan would consolidate what is now an alphabet soup of banking and securities regulators into a trio of overseers responsible for everything from banks and brokerage firms to hedge funds and private equity firms…

The proposal itself began last year as an effort by the Treasury secretary, Henry M. Paulson Jr., to make American financial markets more competitive against overseas markets by modernizing a creaky regulatory system.

Their goal seems not to help the American economy, but to make it even easier to pillage the remaining healthy parts of the U.S. economy. Some of the changes Paulson is proposing in the Bush administration’s “blueprint” are more deregulation:

The S.E.C. should take a lighter approach to its oversight, such as allowing stock exchanges greater leeway to regulate themselves and streamlining the approval of new products, even allowing automatic approval of securities products that are being traded in foreign markets.

“New products” and less regulation is precisely the ways Wall Street got into their current mess that U.S. taxpayers are being forced to bail them out. Now, Paulson is seeks to consolidate and “steamline” regulatory bodies to remove the little oversight that remains. For example, the administration wants to reduce the power of the Securities and Exchange Commission and merge that body with the Commodity Futures Trading Commission.

Fortunately, we have a Democratic Congress in to protect American interests.

Almost every element of the proposal would have to be approved by Congress, where Democratic leaders are already drafting bills to impose tougher supervision over investment banks, hedge funds and the fast-growing market in derivatives like credit-default swaps.

However, we saw what kind of review the Democrats in Congress gave to legislation proposed by the Bush administration when the country was reeling from the shock of the terrorist attacks of September 11th, 2001. This sort of shock got us the PATRIOT Act. Now this self-inflicted economic wound is causing similar panic. This is precisely the time this untrustworthy administration will use advance their radical economic agenda.

Like what happened in 2001, there may not be much Democratic opposition this time either. According to the NY Times, some of the proposals being advocated by the Bush administration are cleverly cloaked in “reforms” championed by Democrats such as Barney Frank (D-MA), House chairman of the Financial Services Committee. Both Treasury Secretary Henry Paulson and Frank “favor a stronger Fed role”, but the administration is only disguising what they’re really after.

Mr. Paulson’s proposal, however, would fall short of the kind of regulation that Democrats have been proposing. Mr. Frank and other senior Democrats have argued that investment banks and other lightly regulated institutions now compete directly with commercial banks and should be subject to the same kind of regulation – including examiners who regularly pore over their books and quietly demand changes in their practices.

Despite being float as proposals to increase Federal Reserve’s regulatory scope, but to reduce overall regulation. The Fed would be responsible for “market stability” and Paulson’s “proposal would dramatically consolidate a slew of regulators into roughly three big new agencies”. The last time the United States did a big consolidation of agencies we got the inept Department of Homeland Security.

These majority of the proposals being put forward by Paulson were “developed before soaring mortgage defaults kicked off a much broader credit crisis, and most of the proposals are geared to streamlining regulation.” Streamlining, of course, being another word for eliminating. The Bush administration is using the subprime mortgage meltdown as a decoy to advance their economic agenda in a way that is reminiscent of they way they used the attacks of 9/11 to advance their war agenda with Iraq.

I’m not an economist. I’m not a professional investor. So this is just my read. I am concerned that Congress will feel they need to do something, anything and hurry this economic shock therapy into law. Democrats in Congress – do not trust the Bush administration. Slow this shock treatment down. Review and read everything Paulson and the rest of these robber barrons propose.

Congress, do not sell us out again. We can no longer afford your mistakes.

19 comments

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  1. Cross-posted at the Daily Obama.

  2. The bush administration is going to provide market stability? Like they’ve provided stability in Iraq, and in New Orleans?  

    • nocatz on March 29, 2008 at 4:16 am

    legally change to’ Bear Stearns’ today.

  3. a passle of “wise men” who “understand” the economic system to “regulate” it.  Annointed by Paulson, an investment banker.

    This is what the Russians call “pokazukha”, roughly translated as “window dressing”, as will be any action by the Congress.  Paulson knows better than most that NOBODY really understands the economy, or any economy; otherwise there would be no need for either economists or investment bankers.  Further, otherwise there wouldn’t be a more or less continuous flow of regulatory legislation, in effect the serial plugging of the holes revealed in the economic dike as we capitalists figure out new and different (i.e. unregulated) ways to bilk folks out of their money (I say this in all seriousness:  that is what economic activity is about, like it or not).

    It follows from the analogy that there IS NO REGULATORY answer, because humans are infinitely inventive (not to mention larcenous).  Which is not to say that no attempt should be made:  when you see a cockroach, you stomp it, even though the overall detriment to the cockroach population is trivial.  Let’s hope that reason prevails, somewhere, and people figure out that any grandiose plan (take SOX, for instance) is likely to be more deleterious than otherwise).

  4. I guess we need to get ready for a major PR battle starting NOW! If the media glosses over the actual contents of the proposal I’m gonna be livid. The Democrats better not go along with this deregulation.  

  5. This is an end-run around the banking committee of the Senate chaired by Chris Dodd – be afraid

    • skymutt on March 29, 2008 at 11:27 am

    I fail to be impressed by our Democratic Congress’ response to this crisis.  The $150 billion helicopter drop of money borrowed from Saudi Arabia and China only helps delay the worst of the recession into the next administration, while digging the fiscal hole a little deeper.

    I wish guys like Frank would just leave well enough alone for the most part.  We don’t need a bunch of new agencies full of  bureaucrats working at cross purposes.  We do need a few focused but limited measures… and time.  I do approve of most of the provisions in S.2636, the Foreclosure Prevention Act, especially those that would allow bankruptcy judges to alter the terms of mortgages on primary residences, for instance.  

  6. that brought you 935 lies.

    The Illuminati runs the world, period and right now there is profit to be made in taking down the rest of America.

  7. pings a Wagnerian finale.  OMG!  Shock Doctrine!  I think you are right on here, Magnifico.  

    In “Is an International Financial Conspiracy Driving World Events?”, Richard C. Cook writes on the Global Research web:  

    Was Alan Greenspan really as dumb as he looks in creating the late housing bubble that threatens to bring the entire Western debt-based economy crashing down?

    Was something as easy to foresee as this really the trigger for a meltdown that could destroy the world’s financial system? Or was it done, perhaps, “accidentally on purpose”?

    Cook connects many of the events of recent years to the theory of one world government, governed by “us” of course, with ideas from David Rockefeller:

    …a celebrated statement he allegedly made in an opening speech at the Bilderberg conference in Baden-Baden, Germany, in June 1991:

    “We are grateful to the Washington Post, the New York Times, Time magazine, and other great publications whose directors have attended our meetings and respected their promises of discretion for almost forty years. It would have been impossible for us to develop our plan for the world if we had been subject to the bright lights of publicity during these years. But the world is now more sophisticated and prepared to march towards a world government which will never again know war, but only peace and prosperity for the whole of humanity. The supranational sovereignty of an intellectual elite and world bankers is surely preferable to the national auto-determination practiced in the past centuries.”

    This speech was made 17 years ago. It came at the beginning in the U.S. of the Bill Clinton administration. Rockefeller speaks of an “us.” This “us,” he says, has been having meetings for almost 40 years. If you add the 17 years since he gave the speech it was 57 years ago-two full generations.

    After ennumerating events such as NAFTA, the housing bubble, the entire war on the global poor, Cook conludes:

    …all these things are parts of the elitist plan which Mr. Rockefeller boasts to have been developing, isn’t it a little strange that the means which have been selected to achieve “peace and prosperity for the whole of humanity” involve so much violence, deception, oppression, exploitation, graft, and theft?

    In fact it looks to me as though “our plan for the world” is one … based on genocide, world war, police control of populations, and seizure of the world’s resources by the financial elite and their puppet politicians and military forces.

    In particular, could there be a better way to accomplish all this than what appears to be a concentrated plan to remove from people everywhere in the world the ability to raise their own food? After all, genocide by starvation may be slow, but it is very effective. Especially when it can be blamed on “market forces.”

    And can it be that the “us” which is doing all these things, including the great David Rockefeller himself, are just criminals who have somehow taken over the seats of power? If so, they are criminals who have done everything they can to watch their backs and cover their tracks, including a chokehold over the educational system and the monopolistic mainstream media.

    AND:

    One thing is certain: The voters of America have never knowingly agreed to any of this.

    To read the entire article, go here

    • creeper on March 30, 2008 at 9:29 pm

    George W. Chimp restructuring the primary basis for stability in our monetary system.

    If you’re not scared sh*tless by now, you should be.

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