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Financial Reform in Congress





handfleisch
Very interesting times in Washington. First the SEC charges Goldman Sachs with fraud, then Democrats put forth a financial reform package to prevent future Wall Street abuses that led to the financial crisis, including regulating the shady derivatives market, then Obama says he wants the bill to be stronger. Republicans are against the whole thing, working alongside the lobbyists for the banks and Wall Street.
Quote:

Decision near for financial reform in U.S. Senate
* Bipartisan talks on compromise roll through weekend


* Shelby says deal not likely on Monday

(Adds new Shelby comments)

By Kevin Drawbaugh

WASHINGTON, April 26 (Reuters) - The most sweeping overhaul of U.S. financial regulation since the Great Depression, including tough new rules for the derivatives market, was slated for a crucial test vote in the U.S. Senate on Monday.

As Wall Street reeled from more revelations out of the U.S. government fraud case against Goldman Sachs (GS.N), Democrats seized the political initiative to advance their bill, months in the making and said to be 1,340 pages in length.

The future shape and profitability of the banking industry hangs in the balance, more than two years since the worst financial crisis in generations unleashed reforms worldwide.

The stakes are high for President Barack Obama. Since the recent passage of his landmark healthcare restructuring, he has sharply criticized Wall Street in speeches backing the Democratic financial regulation bill.

Senate Majority Leader Harry Reid has set a procedural vote to begin debate on the bill for late on Monday. Republicans have vowed to vote to block consideration of it, although closed-door talks about a bipartisan agreement carried on.
On Sunday, sources told Reuters that the bill will include provisions that would require banks to spin off business units involved with trading swaps, which is a type of financial contract implicated in the fall of bailed-out insurer AIG.

Sources said the bill will contain proposals being put forward by Democratic Senate Agriculture Committee Chairman Blanche Lincoln, whose approach to new rules for the unpoliced, $450-trillion over-the-counter derivatives market has been harder-hitting than earlier proposals.

Other controversial parts of the Democrats' bill include forming a new consumer protection watchdog and devising a new government process for dismantling troubled financial firms.

With an eye to ending bailouts of 'too big to fail' firms, like Goldman Sachs, Democrats want a new "orderly liquidation" process. As proposed, it aims to protect taxpayers from costly bailouts, like that of AIG (AIG.N), while shielding the economy from shock bankruptcies, like Lehman Brothers' (LEHMQ.PK) 2008 collapse.

DODD, SHELBY MEASURED

The chief antagonists in the debate -- Democratic Senate Banking Committee Chairman Christopher Dodd and Republican Senator Richard Shelby -- did not meet on Sunday, aides said.

Shelby, the banking committee's top Republican, told ABC's "Good Morning America" program on Monday that lawmakers would continue to discuss the bill but that a deal was not imminent.

"I don't believe we'll have a deal today," he said, adding that he would meet with Dodd at 2 p.m (1800 GMT). "I believe we're going to get a good bill, but that's what we want, we want a strong bill," he said.

Republicans have said they oppose the Democrats' bill on various grounds, including calling it a costly overreach of government that could reduce credit flows.

Hundreds of lobbyists for banks and Wall Street, sometimes working closely with Republicans, have been working for months to block the reform plans, which threaten profits, particularly in the lucrative derivatives market.
ocalhoun
handfleisch wrote:
Very interesting times in Washington. First the SEC charges Goldman Sachs with fraud, then Democrats put forth a financial reform package to prevent future Wall Street abuses that led to the financial crisis, including regulating the shady derivatives market, then Obama says he wants the bill to be stronger.

Good...
You forgot to mention their wall-street fundraiser in that process though.
deanhills
Hopefully Goldman Sachs will get a chance to defend themselves against the charges. Looks as though the Government and media have already branded them guilty with large capital letters. What has happened to the legal right of being innocent until proven guilty?
MYP415
Have you already forgotten that we are in a financial crisis that was caused by moral hazards similar to these?
deanhills
MYP415 wrote:
Have you already forgotten that we are in a financial crisis that was caused by moral hazards similar to these?
Good point. I wonder whether Goldman Sachs should be the only organisation being investigated when the large Banks who were bailed out were responsible for mismanagement on a much larger scale. If one really go into ethics, when Banks get bailed out for 1.2 trillion dollars, due to mismanagement, then Government has to be accountable to the taxpayers for the money that it borrowed from the taxpayers. I have seen no information at all with regard to accountability for that large sum of money. So let's rather crucify someone with hiding millions, than focus on the accountability and transparency of the bank bail-out transactions?
Voodoocat
Quote:
then Democrats put forth a financial reform package to prevent future Wall Street abuses


There might be reason to oppose the bill- maybe its full of junk! For example, did you know that one Democrat has injected an amendment that would allow the FTC (Federal Trade Commission) to regulate vitamins? The FDA (Food and Drug Administration) would make sense, but why the FTC? Sounds silly to me. And why add a vitamin bill to a so-called financial reform bill? None of this makes sense to me.

Quote:
What Waxmans provision does is give even more power to the Federal Trade Commission to regulate dietary supplements.


http://canadafreepress.com/index.php/article/22750

This reminds me of the old joke: What is the last thing you want to hear during an emergency?

Answer: "I'm from the government and I'm here to help".
Voodoocat
Are you sure the Democrats have your best interests at heart?

Quote:
Among the considerations still in the balance: A big provision being sought by Warren Buffett in recent weeks. A key Senate committee had changed its proposed overhaul of derivatives regulation after lobbying by Mr. Buffett's Berkshire Hathaway Inc., potentially helping the famed investor avoid a financial hit, congressional aides say.


Quote:
The provision, sought by Berkshire and pushed by Nebraska Sen. Ben Nelson in the Senate Agriculture Committee, would largely exempt existing derivatives contracts from the proposed rules.


Quote:
Berkshire officials have long supported Mr. Nelson. Berkshire employees, including Mr. Buffett, have given Sen. Nelson $75,550 over his political career, more than any other company, according to the Center for Responsive Politics, a nonpartisan group that tracks such data.


It seems that several key Democrats are more interested in helping billionaires, not the common folk.

Now do you think that the Republicans are wrong to oppose this bill? Certainly reform is needed, but this bill is starting to sound like a pork sandwich, not true reform.

http://online.wsj.com/article/SB10001424052748703441404575206252252365076.html[/b]
deanhills
Voodoocat wrote:
It seems that several key Democrats are more interested in helping billionaires, not the common folk.
I'm not that sure whether the Republicans are any different. Billionaires help to fund election campaigns of political candidates that they can get the most mileage out off, "I pat your back, you pat my back". Sort of the name of the game. This is typical of a plutocracy (as opposed to a democracy):
Quote:
Plutocracy is a pejorative reference to a disproportionate influence the wealthy have on political process in contemporary society: for example Kevin Phillips, author and political strategist to U.S. President Richard Nixon, argues that the United States is a plutocracy in which there is a "fusion of money and government."

Further evidence for the US transition to plutocracy is shown in the movie "Capitalism: A Love Story by Michael Moore." A report leaked from citigroup in 2006 titled "Revisiting Plutonomy: The Rich Getting Richer" gives a large body of statistical evidence for the transformation to plutocracy.

The influence the wealthy minority of the population has over the political arena includes campaign contributions, as well as bribing to achieve corporate objectives (exclusively profit related), refusing to support the government financially by refusing to pay taxes, threatening to move profitable industries elsewhere, and essentially any form of manipulation of the government. It can also be exerted by the owners and ad buyers of media properties which can shape public perception of political issues (see also: fourth estate).

Recently, there have been numerous cases of wealthy individuals and organizations exerting financial pressure on governments to pass favorable legislation (see also: Lobbying). Most western democracies permit partisan organizations to raise funds for politicians, and it is well-known that political parties frequently accept significant donations from various individuals (either directly or through corporate, labour union, or other advocacy groups). These donations may be part of a cronyist or patronage system. Some describe these donations as bribes, although legally they are not unless a quid pro quo exists. Ostensibly, campaign donations should have no effect on the legislative decisions of elected representatives; however it would be unlikely that no politicians are influenced by these contributions.

Source: Wikipedia
handfleisch
Voodoocat wrote:
Are you sure the Democrats have your best interests at heart?
It seems that several key Democrats are more interested in helping billionaires, not the common folk.

Now do you think that the Republicans are wrong to oppose this bill? Certainly reform is needed, but this bill is starting to sound like a pork sandwich, not true reform.

http://online.wsj.com/article/SB10001424052748703441404575206252252365076.html[/b]


Wait - isn't helping billionaires the Republican thing? Why are you against it when Democrats do it?

More seriously, after all the call for financial reform, Democrats start the process. Isn't that at least a good thing, like more regulation of the derivatives market (which should be made illegal in my opinion)? But they get immediately obstructed by the Republicans, who start with their big lies and refer to it as a "bail out", while of course working with the Wall Street and Banking lobbyists to try to stop it. Don't you see what is wrong with this picture?
ocalhoun
handfleisch wrote:

More seriously, after all the call for financial reform, Democrats start the process. Isn't that at least a good thing, like more regulation of the derivatives market (which should be made illegal in my opinion)? But they get immediately obstructed by the Republicans, who start with their big lies and refer to it as a "bail out", while of course working with the Wall Street and Banking lobbyists to try to stop it. Don't you see what is wrong with this picture?

But that's only half of what's wrong with the picture.
deanhills
ocalhoun wrote:
handfleisch wrote:

More seriously, after all the call for financial reform, Democrats start the process. Isn't that at least a good thing, like more regulation of the derivatives market (which should be made illegal in my opinion)? But they get immediately obstructed by the Republicans, who start with their big lies and refer to it as a "bail out", while of course working with the Wall Street and Banking lobbyists to try to stop it. Don't you see what is wrong with this picture?

But that's only half of what's wrong with the picture.
Well said Ocalhoun. Guess debates like these can only be along bi-partisan lines. Like going right round the same circle every time.
ocalhoun
deanhills wrote:
ocalhoun wrote:
handfleisch wrote:

More seriously, after all the call for financial reform, Democrats start the process. Isn't that at least a good thing, like more regulation of the derivatives market (which should be made illegal in my opinion)? But they get immediately obstructed by the Republicans, who start with their big lies and refer to it as a "bail out", while of course working with the Wall Street and Banking lobbyists to try to stop it. Don't you see what is wrong with this picture?

But that's only half of what's wrong with the picture.
Well said Ocalhoun. Guess debates like these can only be along bi-partisan lines. Like going right round the same circle every time.

Unfortunately, bipartisanship is sorely lacking in the current batch of politicians, and will probably be absent in the next as well, as both sides try to 'rally the base'.

The only hope is that independent voters will vote for Libertarians and/or moderate reform-centered politicians in both current parties.
deanhills
ocalhoun wrote:
The only hope is that independent voters will vote for Libertarians and/or moderate reform-centered politicians in both current parties.
Do you then see a similar direction as in the UK, where a third party is coming more into its own, i.e. the Liberal Democrats?
ocalhoun
deanhills wrote:
ocalhoun wrote:
The only hope is that independent voters will vote for Libertarians and/or moderate reform-centered politicians in both current parties.
Do you then see a similar direction as in the UK, where a third party is coming more into its own, i.e. the Liberal Democrats?

I'm not as familiar with UK politics as with American, but from what I've read, it's similar.
Apparently, both major parties in the UK were edging closer to the right (by European standards anyway), which made many left-leaning voters want change, giving rise to the more leftist liberal democrat party. (Again, may I remind you that I could well be mistaken about that, since my experience with UK politics is limited.)

In the US, both parties are edging towards a more statist/populist/totalitarian/big-government/whatever-name-you-like-for-it direction, which will hopefully lead to making a libertarian/small-government party mainstream.
It almost happened with the tea party, but the right wing took that over, perverting and obscuring the original intent of wanting smaller government.
I'm hoping the next libertarian/small-government movement will learn from this and resist influence from existing parties.
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