Barack Obama

Reason.tv: 3 Reasons New Financial Regs Won't Fix Anything

|

The financial reform bill currently working its way toward President Barack Obama's desk for signing is being touted as the biggest overhaul of the banking and investment sectors since the Great Depression.

But the new regs won't be any more effective than the ones they replace in fixing anything or preventing the next major panic for at least three reasons.

1. New Watchdog, Old Tricks

They create a new watchdog consumer agency designed to protect consumers from their own supposed stupidity. You'll now be facing fewer choices when it comes to getting credit cards, loans, and doing other basic financial transactions.

2. Never Too Big To Fail

They replace "Too Big to Fail" with… "Too Big to Fail." One of the reasons why major financial institutions played Russian Roulette with the economy was because they were betting they would get bailed out. Which is precisely what happened. The new rules codify the idea that the government will make sure certain institutions can never fail. And if you think the big boys won't game that system, then you don't understand how well Citigroup, Goldman Sachs, et al have come through the current meltdown.

3. Housing Bubble Trouble

The financial crisis was set into motion by government policies that encouraged people to buy homes they couldn't afford at prices that were unsustainable. Between desperate attempts to keep people in houses and to keep interest rates below an effective rate of zero, the government continues to pour more money down the same rathole.

Markets work best when the risk and reward incentives are clear cut. When investors know they really can lose it all, they act responsibly with their money. If regulators think they can create a system that cushions us from bad decisions and doesn't encourage bad behavior, it's a delusion we'll all be paying for for a very long time.

Approximately 2 minutes. Produced by Meredith Bragg and Nick Gillespie, who also hosts.

Go to Reason.tv for downloadable iPod, HD, and audio versions of this and all our videos, and subscribe to Reason.tv's YouTube channel to receive automatic notification when new material goes live.

Advertisement

NEXT: Friday Facebook Link: The Wire Meets the White House

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

  1. I am too big to fail.

    1. FTW, right out of the gate…

  2. But when it fails, it will provide us an excuse to pass even more regulations. If that is not success what is?

  3. But when it fails, it will provide us an excuse to pass even more regulations. If that is not success what is?

    1. Many moons ago, I used to read an anarchist’s website. He had a great line, “In government, nothing succeeds like failure.”

  4. As usual, the libertarians come out swinging against this law because they would rather see the richest 1% continue to take money from the middle and lower classes who continue to see a decline in standards of living. After all, nothing is worse than laws in place to protect the downtrodden.

    1. You think Goldman Sachs is downtrodden? HAHAHAHAHAHA!

    2. Please explain the mechanism by which the richest 1% are taking money from the middle and lower classes and how this bill will address that.

      In actuality, this bill codifies into law a mechanism for the richest 1% to take money from the middle class through the “too big to fail” bullshit.

      1. If these institutions had failed in 2008, we all would have been worse off. Perhaps the CEOs would have run off with a nice next egg, but everyone would have lost even more money.

        They can’t fail, but they will also be more heavily regulated by responsible, intelligent government officials, ensuring they don’t do anything stupid or irresponsible. It’s really the only way we can prevent another meltdown.

        1. They can’t fail, but they will also be more heavily regulated by responsible, intelligent government officials

          Fox, meet hen house.

          My work is through here.

        2. If these institutions had failed in 2008, we all would have been worse off.

          Everytime you regressives say this while simultaneously wailing about “OMG TEH CORPORASHUNS”, I can’t help but laugh.

          I will repeat my question since you didn’t answer it.

          Please explain the mechanism by which the richest 1% are taking money from the middle and lower classes and how this bill will address that.

          1. This isn’t for us to understand. Our elected officials have drafted a bill that will stop the large corporations from behaving irresponsibly. Bush and co had their chance and did irreparable damage to the economy. Until his libertarian supporters acknowledge that, they need to stop criticizing those who are fixing the system. I, for one, trust the democrat presidency and congress far more than the prior Republican one.

            1. This comment reminds me of the episode of Family Guy where Brian brings the model home to his family and she tells them, “I think there are things the government can’t tell us, and truthishly, we should just accept that.”

              By the way, Tony, the housing bubble had its roots in the Clinton Administration, not the Bush administration.

              1. Actually, the roots of both of the “Dot-Com” bubble AND the housing bubble go back to Reagan when he appointed Greenspan as head of the Federal Reserve.

            2. This isn’t for us to understand.

              Why not? Do the People not deserve to know such things? Is it information that would be dangerous in the hands of the Proletariat? Or is this just another one of those Pelosi-esque “we need to pass the bill so we can see what’s in it” situations?

              1. Because, comrade Brian Trust, reality is just anti-communist propaganda.

                To seek to gain knowlege of reality is anti-social behavior.

                1. In Fiscal Meth there is Truth!

            3. Bush and co had their chance and did irreparable damage to the economy. Until his libertarian supporters acknowledge that, they need to stop criticizing those who are fixing the system.

              All six of those libertarian Bush supporters.

              1. Sweet, spoof Tonys…right??

            4. Tony|7.2.10 @ 1:47PM|#
              “This isn’t for us to understand.”
              Hah, haaah, hah, shnerkle, sniffle! That was *funny*!

              “Our elected officials have drafted a bill that will stop the large corporations from behaving irresponsibly.”
              In all likelihood, they drafted something outlawing the horses that already bolted the barn. Government is so hide-bound that the market will immediately find ways around whatever it is that passed.

              “Bush and co had their chance and did irreparable damage to the economy. Until his libertarian supporters acknowledge that, they need to stop criticizing those who are fixing the system.”
              OK, show of hands! Let’s see the ‘libertarian supporters’ of Bush!
              OK, c’mon, I know you’re out there! C’mon, gimme one at least.
              Uh, Tony, I don’t see any…

              “I, for one, trust the democrat presidency and congress far more than the prior Republican one.”
              And that says ‘way more about you than anyone else.

        3. And by “responsible, intelligent government officials, ensuring they don’t do anything stupid or irresponsible” you mean the responsible, intelligent government officials that created this financial meltdown in the first place? You really are a tard.

        4. “responsible,intelligent government officials”? really?

        5. “they will also be more heavily regulated by responsible, intelligent government officials, ensuring they don’t do anything stupid or irresponsible.”

          I wonder if this is exactly what people were thinking when the US Minerals Management Service organization was born. Yeah- cuz they didn’t take bribes from BP or others, or let certain favored groups get away with stuff, or anything like that- right?!?!

        6. If these institutions had failed in 2008, we all would have been worse off.

          Behold! The man who can foretell… the past!!!

    3. …the middle and lower classes who continue to see a decline in standards of living.

      Yeah, it’s rough having only two cars, multiple TVs, a computer, a laptop, a PS3/XBOX/Wii, and a snazzy cell phone to talk to everyone about how horrible the standard of living today is.

      And my parents and grandparents have the gall to think that they had it rough.

    4. Tony|7.2.10 @ 1:17PM|#
      “As usual, the libertarians come out swinging against this law because they would rather see the richest 1% continue to take money from the middle and lower classes who continue to see a decline in standards of living.”
      Cite, please.

      “After all, nothing is worse than laws in place to protect the downtrodden.”
      Non-sequitor; to be ignored.

    5. Thank you, Tony, for showing the true meaning of “wealth envy”.

  5. I don’t get what Geitner’s TurboTax comment has to do with any of this?

  6. Geitner saves time by doing his taxes on TurboTax so as to spend more time helping to rescue us from the economic mess Bush’s libertarian regime brought about.

    1. Bush’s libertarian regime? Like I noted above, you’re a tard.

      Bush’s economic policies were not remotely libertarian and they are closer to Obamalamadingdongs.

    2. HAHAHAHAHAHA

    3. “Geitner saves time by doing his taxes on TurboTax so as to spend more time helping to rescue us…”

      Holy shit that is the funniest thing I have ever heard! What? There’s more?!?

      “…from the economic mess Bush’s libertarian regime brought about.

      HAHAHAHAHAHAHAHAHAHAHAHAHAHAHA!!!!

    4. Tony|7.2.10 @ 1:41PM|#
      “…Bush’s libertarian regime…”
      And you expect to be taken *seriously*?!

    5. Bush was no libertarian, Tony. Quit your fucking lying.

  7. I’m getting confused. Libertarians don’t like Obama, so that should mean they like Bush. But, they are saying they don’t like Bush, either.

    THIS.DOES.NOT.COMPUTE.

    (Head explodes)

    1. No Tony, you’ve been confused for quite some time now. So in Tony land, if you don’t like what’s in your left hand you automatically like what’s in your right hand? I suppose that works for an unthinking automaton like yourself.

    2. It’s called a false dichotomy Tony.

  8. Don’t lose your head, Tony. I need useful people like you.

    1. Useful idiots?

  9. I am sorry, I am no longer able to comment on this or any future threads, as my head has exploded.

    I must wait until 2013, when ObamaCare kicks in, when I can have the pieces of my head successfully and cheaply reassembled.

    Chad, Chicago Tom and the like will continue to educate the ‘tarians. Just don’t confuse them with any talk of not liking Bush or Obama, as it will confuse them to no end.

    If Reasoners are still allowed to broadcast their misinformation when I am back, I look forward to (re?)educating you then.

    1. I must wait until 2013, when ObamaCare kicks in, when I can have the pieces of my head successfully and cheaply reassembled.

      — by responsible, intelligent government officials

      1. Of course. I’d never let the private sector touch me.

  10. It took you two minutes to explain why this regulation was bollocks? I figured it out in about four seconds:
    1. Dodd and Frank helped write it,
    2. Obama supports it,
    3. 2B2F bank stocks went up after it.

    Admittedly, that’s all gut instinct; but if I see a trio of known robbers hanging around a storefront, and the window is broken, I pretty much know what’s happened even if I wasn’t party to their discussion.

    1. BTW, that last comment was mostly facetious. It’s nice to have an explanation for HOW, exactly, Dodd and Frank put us in the middle of a Taxpayer Sandwich.

  11. I’ve coined a new pop culture phrase guys, “President Barack Obama has created A GOVERNMENT BUBBLE!”

    Start using it freely with my permission, but occasionally remind the Public that it was Van, an anonymous blogger on Reason Mag who first coined the phrase.

    Thanks.

  12. I see I’ve been spoofed.
    That’s not even close to fair.
    Tony makes statements ignorant in the extreme. But to ‘sock’ Tony and make even more ignorant statements?
    Let him make his own.

  13. I can’t stop laughing at real Tony’s comments, they were more funny than the spoofs.

  14. This is also not to mention that there were a bunch of regulations that could’ve halted many of the practices to begin with but weren’t enforced.

  15. “The financial crisis was set into motion by government policies that encouraged people to buy homes they couldn’t afford at prices that were unsustainable. “

    This is a somewhat facile red team argument, who would have substituted the term “minorities” for “people” in that statement.

    In reality, the government (to the extent that it was involved) was flaming the greed of the lenders, far more than encouraging the home buyers. Home buyers weren’t exchanging mortgage-backed securities or manipulating hedge funds, or paying out loans at 100x the value of the assets they actually held to back the loans.

    Realtors were convincing people that a home was an investment, that houses could be flipped in months for huge profits, etc. That definitely wasn’t the government. A real estate agent is an excellent example of the free market: not required, but there are a multitude to choose from if you want to take advantage of their expertise or delegate your responsibilities to them (agency).

    The government is the source of a disproportionate share of evil, but not all of it. It made a lot of mistakes here (notably the bailouts), but it didn’t make all of them.

    1. But weren’t banks blackmailed by government into making those bad loans?

  16. Not only are the points made in the video problems with the Bill but many of the definitions are vague and open to interpretation. Much like how the the original Federal Reserve Bill was a Trojan Horse. This bill encourages even more financial consolidation. Big? You have seen nothing yet!

Please to post comments

Comments are closed.