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Morning Bell: The Lawyers and Lobbyists Full Employment Act
Posted By Conn Carroll On July 16, 2010 @ 9:21 am In Ongoing Priorities | Comments Disabled
Without spending a single dime, the Obama administration did more yesterday to create jobs for the U.S. economy than it has throughout its entire existence. With the single stroke of a pen, President Barack Obama signed the Dodd-Frank financial regulation bill that set in motion 243 new formal rule-makings by 11 different federal agencies. Each of the 243 rule-makings will employ hundreds of banking lobbyists  as they try to shape what the final actual laws will look like. And when the rules are finally written, thousands of lawyers will bill millions of hours as the richest incumbent financial firms that caused the last crisis figure out how to game the new system. Yesterday, the Washington law firm Jones Day snapped up the Securities and Exchange Commission head enforcement division lawyer,  and J.P. Morgan Chase, one of the biggest U.S. banks by assets, assigned more than 100 teams  to examine the legislation. University of Massachusetts political science professor Thomas Ferguson tells The Christian Science Monitor :
By delegating so much to the regulators, Congress is inviting everyone interested in the outcome to make more campaign contributions, as they intervene in the regulatory process to influence the regulators. Nothing is settled. It’s a gold mine for members of Congress.
So if the richest big banks, lawyers, lobbyists and Congress were the big winners yesterday, who are the losers? Small banks, entrepreneurs and you.
Smaller community banks do not have the same resources that the Goldman Sachs of the world do to hire armies of lawyers and lobbyists to shape and comply with new regulations. The cost of compliance will eat up a much larger share of small bank revenue. Jim MacPhee, CEO of Kalamazoo County State Bank in Michigan and chairman of the Independent Community Bankers of America (ICBA), told USA Today : “We weren’t part of the subprime (mortgage) meltdown. Why throw more regulations at us?”
Entrepreneurs take a double hit in the Dodd-Frank bill. First, by forcing banks to raise more capital it will now be more difficult for them to make new loans for small businesses. But more important is the regulatory threat for new products. Across  the  world  mobile device and telecommunications firms are beginning to compete against  credit card companies and banks to reshape how consumers buy products and manage their finances. Will the Dodd-Frank Consumer Financial Protection Bureau  even allow these services to come to market? Will cell phone firms have to be regulated exactly like financial firms? Nobody knows the answer to these questions. Here is what we do know: it will be the banks and telco firms with the best lawyers and lobbyists – not the best entrepreneurs – that come out on top in this battle.
Then there is what the Dodd-Frank does not do: it does nothing to stop future government bailouts. Instead, it makes the TARP bailout system permanent . The bill’s “orderly liquidation” process empowers regulators to seize any firm they deem a threat to our financial system and liquidate them. These powers are subject to insufficient judicial review and do nothing to ensure that the firms’ creditors won’t receive 100% of their irresponsibly lent money back in future taxpayer funded bailouts. And speaking of taxpayer-funded bailouts, the bill does nothing to address Fannie Mae and Freddie Mac,  whose activities were instrumental to the financial crisis .
Back in 1994, Jonathan Rauch wrote in his book Government’s End : “Economic thinkers have recognized for generations that every person has two ways to become wealthier. One is to produce more, the other is to capture more of what others produce. … Washington looks increasingly like a public-works jobs program for lawyers and lobbyists, a profit center for professionals who are in business for themselves.” The Dodd-Frank bill is the perfect extension of Washington as “a public-works jobs program for lawyers and lobbyists.” Instead of encouraging the U.S. economy to invest in engineers, technology and new products, it requires firms to invest in lawyers and lobbyists just to stay alive. It will do nothing to help create new wealth or new net jobs in the economy, but will transfer more wealth to lobbying and law firms in Washington, D.C.
Article printed from The Foundry: Conservative Policy News from The Heritage Foundation: http://blog.heritage.org
URL to article: http://blog.heritage.org/2010/07/16/morning-bell-the-lawyers-and-lobbyists-full-employment-act/
URLs in this post:
 will employ hundreds of banking lobbyists: http://www.msnbc.msn.com/id/37953359/ns/politics-the_new_york_times/
 the Washington law firm Jones Day snapped up the Securities and Exchange Commission head enforcement division lawyer,: http://www.futureofcapitalism.com/2010/07/regulatory-revolving-door-1
 more than 100 teams: http://online.wsj.com/article/SB10001424052748704682604575369030061839958.html?mod=WSJ_hpp_MIDDLETopStories
 The Christian Science Monitor: http://www.csmonitor.com/USA/Politics/2010/0715/Why-financial-reform-might-not-work-as-intended
 USA Today: http://www.usatoday.com/money/industries/banking/2010-07-16-smallbanks16_ST_N.htm
 Across: http://www.businessweek.com/globalbiz/blog/eyeonasia/archives/2009/11/got_a_cell_phone_ill_e-mail_you_money.html
 the: http://www.usatoday.com/tech/products/gear/2005-08-28-cell-banks-africa_x.htm
 world: http://www.youtube.com/watch?v=JRa86nqUCgM
 compete against: http://www.businessweek.com/the_thread/techbeat/archives/2005/06/cell_phones_vs.html
 the Dodd-Frank Consumer Financial Protection Bureau: http://www.heritage.org/Research/Reports/2010/06/Financial-Reform-in-Congress-A-Disorderly-Failure
 TARP bailout system permanent: http://www.foundry.org/2010/04/14/morning-bell-wall-street-bailouts-forever/
 does nothing to address Fannie Mae and Freddie Mac,: http://www.foundry.org/2010/05/06/morning-bell-fannie-and-freddie-failure-forever/
 whose activities were instrumental to the financial crisis: http://www.foundry.org/2009/05/07/whos-behind-the-financial-meltdown/
 Government’s End: http://www.amazon.com/Governments-End-Jon-Rauch/dp/1891620495
 said yesterday: http://blogs.wsj.com/washwire/2010/07/15/boehner-calls-for-repeal-of-financial-bill/
 spent more than $100 per teacher: http://educationnext.org/teachers-unions-in-five-states-spent-more-than-100-per-teacher-on-political-campaigns/
 Rasmussen Reports: http://blog.heritage.org http://www.rasmussenreports.com/public_content/politics/general_politics/july_2010/68_say_political_class_doesn_t_care_what_most_americans_think
 extensive connections with Turkey’s political elite: http://www.nytimes.com/2010/07/16/world/middleeast/16turkey.html?_r=1&ref=todayspaper
 weekly online chat: http://heritageforamerica.org/
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