Sunday, July 22, 2012

Frankly, It's Doddering

How to kill the lumbering piece of faux financial reform legislation known as Dodd-Frank in three easy steps.

1. Allow the banks to help write the bill and make it so complicated and long (848 cyber-pages) that nobody will ever read it, let alone understand it.

2. Forget to add how you're going to pay for the actual implementation of all the new rules and regulations. Make sure that you cut funding right away for such already-cozy and inept groups as the Securities and Exchange Commission and the Commodities Futures Trading Commission so they can't even enforce what's already on the books.

3. Make sure that the real stringent parts -- such as forcing banks to have enough capital on hand to back all their risky bets -- won't take effect for years and years and years. This will allow plenty of time for the financial lobbyists to meet with the Congress critters to whittle away the bill even more, conveniently enabling even more bribery in the form of legal campaign contributions, insider trading tips and other stuff we don't know about yet. (It also allows plenty of time for the too big to exist banks to crash again, but that's another story.)

Dodd-Frank was conceived as an empty threat to the Wall Street mafia. It is/was a PR stunt to appease the ravening Main Street masses thirsty for revenge against the miscreants who crashed an entire economy. It's one more instance of the defacto government policy of being perceived as doing the right thing while doing exactly the opposite behind closed doors. 

Big as it was, Dodd-Frank ironically developed a lethal case of anorexia from the moment it was born, suffering from what is known in medical parlance as Failure to Thrive Syndrome. Less than a third of its increasingly emaciated body is actually functioning two years after it squeezed out of the Congressional birth canal. The other two-thirds are either stuck in a constipated clump of corruption, or just poof! disappeared into wherever it is that legislation protecting the hoi polloi goes to die. So I suppose it's all the more pleasantly serendipitous that the Consumer Financial Protection Bureau survived against the lobbying onslaught. Even though its founder (Elizabeth Warren) played the part of sacrificial lamb to get it going.

You can read the entire two-year progress report on Dodd-Frank from the Davis Polk law firm here.
According to the watchdog group Sunlight Foundation, there have already been hundreds of meetings held between the big banks, including Goldman Sachs, Morgan Stanley and JP Morgan Chase, and financial regulators on how best to "improve" or otherwise de-fang and de-fund Dodd-Frank.
Since July 21, 2010 (when the president signed Dodd-Frank), regulators at the three major banking regulatory agencies – Treasury, the Fed and the Commodities Futures Trading Commission (CFTC) – have reported meeting with 20 big banks and banking associations on average a combined 12.5 times per week – as compared to on average just 2.3 meetings with reform-oriented groups. The top 20 banks show up 1,298 times in meeting logs at the three agencies, while groups favoring tighter regulations of the financial markets show up just 242 times.

 CNN Money quotes former FDIC Commissioner Sheila Bair on the ongoing assault by the banker wankers: "All the lobbyists come in and they want this exception or that exception, and [regulators] are accommodating that and they shouldn't during the financial crisis and its aftermath. They need to just tell these folks no."

Hmmm.... since the "Just Say No" campaign worked so well for the anti-drug movement, I can just imagine how effective it will combating the incurable addiction of insatiable greed. The so-called regulators are nothing more than what used to be called "co-dependents" and what the latest TV ads refer to as addicted enablers. (parents who peer into their kids' room and pretend not to notice the glazed eyes and stashes of pill bottles and rolling papers.)

As a matter of fact, the politicians running for election  desperately need what was once touted as "sweeping financial reform" swept right under the rug, because they desperately need the money from the opponents of Dodd-Frank. Take the so-called Volcker Rule, named after former Fed chairman Paul Volcker. It's gone south, following in the footsteps of the man himself, who was banished from President Obama's economic team at the behest of Treasury Sec. Timothy Geithner. The Rule would prohibit banks from making risky bets with customers' money. Had it been implemented, it might have prevented the collapse of MF Global and "loss" of millions of dollars in life savings and pensions of ordinary people.

Meh. The unindicted chief of MF Global is still a major bundler for the Obama Victory Fund. Jon Corzine's main job these days is collecting campaign cash from hedge fund managers who also hate the idea of the Volcker Rule. The plutocratic confidence men need to feel confidence in the unfettered and freely corrupt markets, and there is no politician alive who dares bite the hand that feeds him.

The Volcker Rule, as Sheila Bair so cogently notes, is just one more needlessly complex rule within the doddering Dodd-Frank bundle of complexities: "easy to game and hard to enforce."

But isn't that the whole point? Learn from the resounding half-century of success of all 30 pages of Glass Steagall, and replace it with legislation that is too big to succeed -- ensuring that banks are still too big to fail. Make sure that small banks are unfairly punished for the sins of the big casinos, further paving the way for the gutting of the whole kit and caboodle. It's like the hall of mirrors in a fun house. The result, of course, is that too many people are trapped in the very unfunny chamber of horrors constructed by the rapacious Dr. Moreaus of the financial world -- with continuing maintenance provided by the simpering sycophants in the political sphere. And don't forget the carnival barkers of CNBC and the rest of the corporate media.


Anne Lavoie said...

The icing on Marie Antoinette's cake is the news that the rich have as much as $32 TRILLION of hidden financial assets in offshore tax havens, representing up to $280 billion in lost income tax revenues. That number does not even include gold, real estate, racehorses, yachts and other non-financial assets.

I foolishly thought it would be on the front page of the NYT. It wasn't.

Denis Neville said...

It may be icing on the cake, but the cake has started to show through.

What kind of cake have the elites left for us?

Are “we the people” going to find this cake acceptable to eat?

The elites are instead eating pie, the whole pie. There’s no pie left for the rest of us. Instead, let us eat cake.

We are being forced to gradually downsize our living standards and expectations. The elites have decided they don’t need a middle class anymore. Their minions, both Democrats and Republicans, are systematically destroying our quality of life.

The class war fix is in and there will be Social Security and Medicare cuts, during a time of unprecedented transfer of income to the top one percent, regardless of who wins the 2012 election.

Yves Smith on how grim the prospects are for the middle aged and elderly, “Is a Great Grey Exodus from America Starting?”

Barbara Tuchman, The March of Folly, described the way in which nations throughout history have come to grief because their leaders refused to act on the evidence that they were pursuing policies that would eventually lead to ruin. “They regarded protest merely as dissent to be suppressed, not as a serious challenge to their validity.”

Suzan said...

But that was the point of Dodd-Frank, right?

Most of us knew that just as soon as everyone started dropping out of sight right after the so-called financial cleanup started.

And I know you did too, K.

Way back when (a decade ago almost) when the Peterson Group started the hysterical nonsense tours about the trouble with Social Security/Medicare/Medicaid funds never being able - ever - to cover the costs, it was the tipoff that they knew something no serious mathematicians did (ask Dean Baker, if you don't believe me).

And that was that they were disbanding the country as a serious concern.

The financial chicanery with the banks (IMHO), which really intensified after Bush stole the second election, was the nail in the national casket. They knew they were going to be caught and they didn't care - or take care not to have been caught so easily.

The Libor truths now coming out make it so clear that I wonder that anyone continues to whine about what seems to have happened.

It already did. And whining (or letting those instrumental in bringing it to us design the solutions) will only salve the conscious of those who really don't understand the seriousness of those mathematics today.

Which they did.

When people joke about the citizens taking to the streets with torches and pitchforks, I always think "it's not a joke, folks - it's the only solution now."

But I may be just too old to give the kids in charge any more rope.

Because it's around my neck.

Thanks for all you do to answer their neverending lies.


Fred Drumlevitch said...

The "Dood-Frank" financial "reform", and what has been left for the rest of us by the elites, is this kind of cake...

... made with the genuine rather than the representational ingredients.

Denis Neville said...

Frank Rich writes, "The public tributes to Griffith were over-the-top in a way his acting never was."

Apparently he never saw “A Face in the Crowd.”

As Lonesome Rhodes, Griffith definitely wasn't Sheriff Taylor, and it certainly wasn’t Mayberry.

Made in 1957, “A Face in the Crowd" was about the power of television to manipulate and control the minds of viewers. This movie never goes out of date. I saw it again last night.

Walter Matthau delivered the epilogue, “We have not seen the last of Lonesome Rhodes. He'll be back, with others just like him.”