ObamaCare For The Financial Sector

As Tim Cavanaugh noted yesterday, President Barack Obama will spend part of today, the anniversary of the Lehmann Brothers collapse, talking up the need for new rules in the financial sector. Because "Too Big to Fail" and more just doesn't give DC or Wall Street enough on-demand power and resources. From an AP preview of the speech:

Obama has sought tougher capital requirements for banks, arguing that banks' buying of exotic financial products without keeping enough cash on reserve was a key cause of the crisis. Treasury Secretary Timothy Geithner has urged the Group of 20 nations to agree on new capital levels by the end of 2010 and put them in place two years later.

The administration also has proposed increased transparency of markets in which banks trade the most complex - and potentially risky - financial products. Obama's broad plan also would give the Fed new oversight powers and impose conditions designed to discourage companies from getting too big.

Er, that's not quite the whole story. Proposed legislation would also explicitly rate institutions as "too big to fail" or "sorta too big to fail" and more, thus adding another level of government backing to a process that already has too much of that. More here.

What's in the pipeline and how will it affect what's in your wallet? Watch these two Reason.tv videos, featuring Reason Foundation's Anthony Randazzo and George Mason/Mercatus' Todd Zywicki for the lowdown on how Obama wants to simplify your financial life. Each is approximately 10 minutes long. For downloadable versions, go to Reason.tv.

Comments

[R C Dean]

Proposed legislation would also explicitly rate institutions as "too big to fail" or "sorta too big to fail"

You gotta wonder what the going rate in terms of political contributions, jobs to relatives, sweetheart deals, and just plain old bags of cash will be for a spot on that list.

[SugarFree]

just plain old bags of cash

A long as the big "$" was easy to see on the bag.

[Warty]

A long as the big "$" was easy to see on the bag.

But for some reason, jugs of porn are not labeled "XXX".

[SugarFree]

Sounds like we need some good ole fashion regulatin'!

[Warty]

Redneck 1: Sure is a ding-dang of a hoedown.
Redneck 2: Uh-uh. This here's a hootenanny.
Redneck 1: Hoedown!
Redneck 2: Hootenanny!
Redneck 1: Hoedown!
Redneck 2: Hootenanny!
Redneck 1: Hoedown!
Redneck 2: Hootenanny!

[SugarFree]

Hoenanny!

[Slow Poke]

All the video embeds on this site really slow it down. Less, please.

[R C Dean]

Hoenanny!

I thought a ho nanny is who a particularly fortunate fellow gets to look after his kids.

[Seward]

As we know, if anything, regulations encourages companies to increase their size and allows them to crowd out smaller competitors. So the whole business about keeping them small will invariably backfire.

Anyway, mostly what the Obama administration is doing is shifting around portfolios.

[Seward]

You know, I think "Yes, Minister" should be required viewing for all incoming elected federal office holders. I think I would be willing to put it up for a constitutional amendment.

[Joette]

Heck yeah! The Fed didn't bother to exercise much of its existing regulatory responsibility prior to the crisis, so let us give it more power that it won't use except when someone manages to bribe them into it. That's the ticket!

What, exactly, happened to that TARP money again?

[Isaac Bartram]

Seward, I just finished watching "Yes, Minister" and "Yes, Prime Minister" again.

What struck me is how the British managed to make a series that managed to so accurately reflect the true nature of political reality without taking sides. Everyone is shown as small minded and conniving and yet none of them is an object of hate (although there is plenty of scorn and derision).

I don't know if the writers of the show had studied Public Choice Theory but that show comes as close to showing my understanding of it as could possibly be done.

I wonder what it is about American film and TV producers that noone can make a show that isn't a paean to the "good" party with the "bad" party portrayed as negatively as possible.

The difference in the actually systems is not enough to explain it in my view. After all I think you could quite easily show a Jim Hacker type president dealing with a Humphrey Appleby as Speaker of the House, even though the situation is not exactly parallel.

[Rich]

... for the lowdown on how Obama wants to simplify your financial life.

Until the tax code is "simplified" so that it can be read in four minutes, this stuff doesn't mean much to me.

[Flange]

"What struck me is how the British managed to make a series that managed to so accurately reflect the true nature of political reality without taking sides. Everyone is shown as small minded and conniving and yet none of them is an object of hate (although there is plenty of scorn and derision)."

Years ago on American TV, there was a similar series about a US Senator. I don't recall the name of it, but it was funny as hell.

[Meta4]

"Years ago on American TV, there was a similar series about a US Senator"

It was called The Powers That Be (TV series)

http://en.wikipedia.org/wiki/The_Powers_That_Be_(TV_series)

[fresno dan]

Old Law: Barn door closed 10% of the time.

Much imporved and O so more prudent law: barn door closed 50% of the time. Taxpayer takes it in the ass twice daily instead of hourly.

[Isaac Bartram]

Actually, I believe Mister Sterling came closer to the Yes, [Prime] Minister idea. But, while the various antagonists were shown as nenal and petty the hero was just too goshdarned highminded.

While The Powers That Be sounds like it's a good comedy I'm not seeing much in the way of political satire in that writeup. I'll have to see it's out on DVD.

[Isaac Bartram]

By "nenal", I meant, of course, "venal".

[Howarad Johnson]

[Gabby Johnson sees the president riding into town]
Gabby Johnson: Hey! The president's a ni...
[church bell tolls]
Harriet Johnson: What did he say?
Dr. Sam Johnson: He said the president's near.
Gabby Johnson: No, gone blame it dang varmits! The sheriff is a ni...
[church bell tolls again]

[Hazel Meade]

Proposed legislation would also explicitly rate institutions as "too big to fail" or "sorta too big to fail" and more, thus adding another level of government backing to a process that already has too much of that

Alternatively, we could rate them, "politically connected", and "paid to play". It would be more accurate.

What is especially disgusting is that "progressives" go around talking about "social justice", and then they back a president who explicitly institutionalizes unjust favoritism for the "too big to fail".

We no long have a "level playing field" for all participants in the market. We have a tiered system where some companies (generally large corporations) are more strictly regulated, but also protected from competition by trade rules and the same regulations. Those companies are so entangled with the government that they are virtually a branch of it. One step removed from the USPS or Amtrak, they only survive because they are the recipients of bailouts and tax subsidies.

And what about the people in the small startups or the self employed? They get nothing - they have to compete with subsidized companies that have the protection of the government - officially sanctioned "too big to fail" favoritism. They are locked out of expansion by regulation and by not being on that special list of companies that can run at a loss and get bailed out.

How exactly is any of that "socially just"?