Banking

Obama Proposes New Financial Regulations, Declines to Tell Administration Financial Officials What They Mean

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Uh, uh, it will, do… something!

Last week, President Obama announced a major new proposal for regulating financial sector activities. The proposal, which is expected to significantly alter the way large financial institutions like Goldman Sachs do business, would… uh… it would… well, as Clusterstock's John Carney reports, the administration hasn't quite gotten around to figuring that out yet: 

The Treasury Department has been scrambling to figure out what the new proposals unveiled by Barack Obama last week limiting the size and scope of banks.

The proposals came out of the White House rather than the Treasury Department. Inside of Treasury there is the feeling that the basis of the plan came from "political people" instead of "economic policy experts," according to a person familiar with the matter.

The Treasury Department has been fielding questions from bankers and journalists about the new regulations—but so far has not been able or willing to provide much information. Calls and emails to a Treasury Department spokesperson went unanswered this week and last week.

Privately, Treasury Department policy people express frustration at the process. Some believe that if the White House had not been in a rush to present the new policy following the Massachusetts election, a more fully detailed policy could have been presented. There is a growing feeling of resentment that the process was speeded up for political reasons.

Truly, I wonder, what is American government coming to when policy decisions are driven by short-term political self interest? And worse, now nameless Treasury staffers has a sad:

"This all came out of the White House. We look like idiots because of this. And we can't get the White House to provide the clarity banks, shareholders and the American people deserve," a Treasury Department employee said.

If it softens the blow, Anonymous Treasury Employee, you can take comfort in the fact that this isn't the only reason your agency looks stupid. 

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  1. “but so far has not been able or willing to provide much information.” They forgot to say “Mother May I?” first.

  2. but so far has not been able or willing to provide much information.

    But, gosh darnit, we are ready.

  3. Truly, I wonder, what is American government coming to when policy decisions are driven by short-term political self interest?

    Hard to say, exactly, but I have a strong hunch the result’s going to look a lot more like Venezuela than it does Hong Kong.

  4. Time Geitner for Chairman of the United States Federal Reserve! He couldn’t do much worse than Bernake, could he?

  5. “The President’s numbers are tanking! The recession just keeps going, government interference in the economy is unpopular, and businesses and Wall Street are uncertain about the future! What can we do?”

    “How about more regulations on banks?”

    “Brilliant!”

    1. Don’t worry, they’re only drilling holes in their end of the boat.

      1. hahahahahah! i’ve never heard that one before.

  6. “The Treasury Department has been scrambling to figure out what the new proposals unveiled by Barack Obama last week limiting the size and scope of banks.”

    I think the truth is they KNOW and know it is a disaster. They are trying to figure out what lies they can get away with telling.

  7. “The Treasury Department has been scrambling to figure out what the new proposals unveiled by Barack Obama last week limiting the size and scope of banks.”

    “And worse, now nameless Treasury staffers has a sad:”

    Why can’t anyone on the internet write a coherent sentence???

    1. Because we are and the keyeboards.

    2. Fast moving trian.

      1. Thank you for translating LOLCat to English.

  8. Shoulda let the bad banks fail, like I was a’sayin’ back in the Aughts. Yep. Gonna pay that there piper right shortly now.

    1. Funny, I remember my grandfather talking about the aughts. He said I aught to do this and I aught to do that ….

    2. So, Pro L, aren’t we in the Aughts for another ninety years? I’ve been telling everyone that this is Aught-Ten, after all.

      Last year it was Aught-Aught-Nine, but that just sounded weird, like I had a hairball or something.

      1. Well, some are say it twere so, but I say it tain’t.

    3. like I was a’sayin’ back in the Aughts.

      We’re still in the aughts!!! GAH!!!

  9. “Truly, I wonder, what is American government coming to when policy decisions are driven by short-term political self interest?”

    Um, you just now started wondering? Have you been drunk for the last decade?

    1. I was.

      1. I wish I had been. Might’ve made it more tolerable.

  10. Does the Treasure Department have free will?

    1. Nothing Gold Can Stay
      Nature’s first green is gold,
      Her hardest hue to hold.
      Her early leaf’s a flower;
      But only so an hour.
      Then leaf subsides to leaf.
      So Eden sank to grief,
      So dawn goes down to day.
      Nothing gold can stay.

      1. Stay gold, Ponyboy, stay gold.

  11. there is the feeling that the basis of the plan came from “political people” instead of “economic policy experts,”

    Treasury has economic policy experts? WTF? Are they keeping them in the basement so they won’t spoil? When the head and public face of your organization is Timothy Fucking Geithner you don’t get to complain about how it looks like “political people” are writing the regs.

  12. The Treasury Department has been scrambling to figure out what the new proposals unveiled by Barack Obama last week[,] limiting the size and scope of banks[,] […]

    . . . mean?

    Seems that the sentence there was not finished.

    1. The libertarian blogosphere has been scrambling to figure out what that sentence.

  13. Is tehre anyone in teh Obama administrashun who is not a corrupt tewl?

  14. “This all came out of the White House. We look like idiots because of this[…]” a Treasury Department employee said.

    Was he complaining, or just describing his job?

  15. Photo caption:
    “This grip will easily give you 10 more yards off the tee, and your drives will go straight every time!”

  16. There are no real “policy decisions” to see here. This is all theater/propaganda/sleigh of hand to convince the “change you can believe in” krew to re-up. And then Obama will fuck ’em over…again…by acting like Bush-lite when push comes to shove.

    1. “sleigh of hand”??? Is that like tow the lion?

      God I love napalm

  17. Caption: “Go ‘way. Batin’.”

    1. Shit, I was trying to tie a fishing joke to a paying off a transvestite hooker joke, but it’s too late now.

  18. People will never know what’s in the regulations until we pass them.

    1. But they’ll LOVE them once they see them!

  19. I blame Twitter.

    1. I blame Bush.

      1. I blame bin Laden.

        1. I blame Kenn Starr.

          1. I blame Saddam Hussein.

            1. I blame the Jews.

              1. Hey! I was gonna say that!

              2. I blame G. Gordon Liddy.

  20. Like I said elsewhere, if you’re listening to the Obama Administration talk about why they want to do what they’re doing or, God forbid, you’re trying to talk to the Administration about what the likely effects of going after the bankers on Wall Street is all about, you’re just wasting time.

    Publicly shellacking the bankers on Wall Street is the end in itself. Some of you contributors at Reason have been talking this week about how the Obama Administration and its supporters aren’t getting the message from the election results in Massachusetts–but you guys don’t seem to be getting the message that the President going after bank bonuses on Wall Street in a big, loud way is the Administration’s response to that election.

    …and, again, there’s no need to talk to anyone about the ultimate effects of their proposals on the markets or the economy. That’s not even a consideration. They’re going after Goldman, especially, because their bonuses are the biggest. And that’s the whole rationale. Going after the bonuses is the goal and the rationale.

    It’s hard for thinking people to believe, but that really is the end of it–no more big bonuses on Wall Street. They’ve already shown they’re willing to do anything to do that, including force an equity stake position for the government.

    No one in the Administration cares about the ultimate affects of policy beyond an end to “Big Bonus”. And if you’re looking for the rationale beyond stopping the Big Bonus menace, you’re completely missing what’s really happening.

    1. Unfortunately, I fear you are right..this is the response to the Massachusetts election. Obama is throwing his lot in with the liberals who seriously believe that Massachusetts, NJ and Va. voted Republican because Obama has not been left wing enough.

      1. Well he can’t make it about the bailouts…if that’s what people are mad about. Obama was on board with all of that. It can’t be the government’s fault–he’s not about to start selling that line…

        So it must be the fault of the banker’s on Wall Street. Yeah, that’s it. They made us do it!

        I don’t think anybody’s ever lost an election for bashing the bankers on Wall Street…

        But doing at a time like this… Like I said elsewhere, the unemployment rate’s not going down much until the banks start lending again (taking on risk), and terrorizing banks for their profits and the way they distribute them is not conducive to getting them lending again.

        …which just goes to show that the Obama Administration doesn’t care about the economy or unemployment–at least not at the expense of political considerations.

        I suspect people have become accustomed by recent history to think of populism as a phenomenon of the right, so they’re slow to see what Obama is doing for what it is. And it isn’t about making banking regulation better or what the effects of this or that will be. It’s just about the bonuses. It’s hard to believe, but it doesn’t have anything to do with anything other than that.

    2. Yes and no.

      The goal of “financial regulation” may well be getting rid of bonuses, for the sole sake of getting rid of bonuses, but the reason this is the response is because it was item #2 on the agenda after health care reform. It was *always* going to be item #2. They simply realzied that health care reform was dead, looked up and saw that financial regulation was in trouble and said “Okay, we lost, moving right along …”.

  21. Awesome…more restrictions on liberty…the banks need to be able to do whatever they…they are just groups of people…they should be free…instead, the won’t be able to charge their fees, will get taxed to death, for more “social programs” to help out “people” in this country…when will this ever end? They’re gonna have to increase the overdraft fees from 35 to 40 just to make up the difference…terrible…

  22. Caption: “No, you just got to squeeze real hard. Like this. See that? Turnip blood.”

    1. I yield; far better caption than mine.

  23. Due to the actions of the NY Fed regarding the backdoor bailout and AIG, and attempted cover-up, Toxic Timmy has become a limited liability. He will soon be the CEO of Maiden Lane I, II, and III.

    Toxic Timmy, the Mark to Market Band, and the Maiden Lane Chorus will soon be performing in the Catskills. Stay tuned for further details.

  24. Truly, I wonder, what is American government coming to when policy decisions are driven by short-term political self interest?

    Has it ever actually been any other way?

    1. I was thinkin’ that too, but then I figured it was snark.

      …but I think that is what a lot of people are talking about when they speak of democracy with affection.

      They want politicians to be preoccupied with their personal political fortunes in the hope that public policy will more closely resemble what the people want.

      I find the prospect kinda scary myself. Sometimes the people want Jim Crow. …and they pretty much always want the heads of Wall Street bankers on a platter. …even if that’s a stupid thing to do.

  25. So you guys are cool with banks picking up virtually free money from the Fed discount window and then trading it on their own account by, say, buying higher-yielding treasuries that you and all the other taxpayers are funding? And then you think all that taxpayer money should be distributed in the form of massive bonuses to a relative handful of guys lucky enough to still work in the banks? And, on top of all that, the government should put no limits on the liabilities it implicitly guarantees, meaning said banks can just keep sucking up huger and huger amounts of liquidity for these type of transactions? Fucking retards. Obama’s doing the right thing.

    1. Nevermind the facts that banks are keeping hundreds of billions at the Fed right now, earning next to nothing in interest, rather than loaning it or buying treasuries. …nevermind that short term treasuries are being bought up to the point that they’ve been able to sell them at negative interest rates to banks (at least twice over the last year)–because they’d rather lose money on an investment right now than risk it on an expanding business (where new employment happens)…

      No, nevermind that. As long as he sticks it to people who make a lot of money, he’ll always have the support of a critical mass of people, who really are so foolish to think that sticking it to the rich is the primary purpose of public policy.

      Again, the unemployment rate isn’t going down until the banks start loaning again. …and Obama know that. He’s just banking on ignorant people that think like you. So long as he’s hammering on the rich, so what?

      It’s just like Bush supporters during his Administration–so long as the president’s pounding on the terrorists, who cares if what he’s doing is hurting the country? It’s all the same thing.

      1. It’s not about hammering bankers. It’s about actually scaling back the level of Federal support. Are you not in favor of that? If you remove the powerful incentives to do these Fed-treasury circular transactions (which ultimately result in a lot of taxpayer money concentrated in the hands of a few people, not through enterprise but because of special circumstances set up by the government) you force banks to seek profits in economically productive activities. The whole idea behind encouraging this stuff in the first place was to give the banks an opportunity to rebuild balance sheets without taking on new risks. But the circumstances have changed and the banks don’t deserve the free ride anymore. I’m simply dumbfounded that commenters here are implicitly in favor of banks continuing to operate under special privileges. Why? Goldman didn’t make all that money by investing in negative-interest short-term treasuries – they did it by putting free money into virtually risk-free but relatively high yielding securities, like longer-term treasuries – which taxpayers are paying for. This is preferable to its opposite? How?

  26. Really, there are a lot of similarities between Bush pounding on terrorism and Obama pounding on Wall Street bankers…

    Among them, there’s the mentality of their supporters. Remember when a lot of Bush supporters used to paint anyone who opposed the Iraq War as a terrorist sympathizer? I’m seeing Obama’s supporters doing more or less the same thing with Wall Street…

    Honestly, not supporting the president terrorizing Wall Street bankers because it discourages making loans and financing the recovery is not a defense of government bailouts or naked shorts or…

    Conspicuous consumption by detestable people is not a good reason to screw with a fledgling recovery.

    1. How do you propose to extract the government from its implicit sovereign guarantee not just of the financial system but of the biggest individual constituents of that system? Seems to me like limiting the scope of any one constituent is a good way to limit sovereign risk, since the implicit guarantee isn’t going anywhere. It’s baked into the markets right now. The government (i.e. the taxpayer should a) limit the risk insofar as possible and b) get paid for what risk remains). Who gives a damn about screwing Wall Street? The issue here is keeping the taxpayer from getting screwed – but you can’t see that because you’re programmed to see the government as an adversarial entity totally separate from yourself. But guess what? It’s your money in the casino.

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