At 1,336 pages, the Dodd financial services regulation bill proposal, which the Senate Banking Committee will begin to consider today, includes language that could create a permanent bank bailout. It is also filled with other significant issues, any one of which could cause serious damage to the economy or consumers by allowing bureaucrats to micromanage financial services firms and require than to meet political priorities. Unfortunately, Sen. Dodd says that he wants the Senate Banking Committee to rush through the bill this week and then to send it to the …
The final details of the financial regulatory reform bill being negotiated by Sens. Chris Dodd (D-CT) and Bob Corker (R-TN) are still being hammered out, but the underlying contours are clear: more government bureaucracy layered on top of our existing impenetrable and unaccountable financial regulatory system. Specifically, the Dodd/Corker plan reportedly still contains these elements: The Consumer Financial Protection Agency – There is still debate over whether this new entity will be a stand alone agency, housed in the Department of Treasury, or housed in the Federal Reserve. Wherever the …
Politico reports today: It was a perfectly reasonable question, and on the surface it seemed like a perfectly reasonable answer. But when Senate Banking Committee Chairman Chris Dodd went on Bloomberg TV Friday and mused about the possibility of bank nationalization, panicked investors sent the Dow plummeting a hundred points in the next hour. Whoops. Dodd’s casual remark and the not-so-casual consequences it caused were among the most vivid examples of a new Washington phenomenon. The city’s sudden status as the de facto world financial capital means that briefings and …
A small provision slipped into the stimulus (PDF) by Sen. Chris Dodd is making big waves in the banking and finance industries. The last-minute addition to the bill, which pretty much no one noticed until after the legislation passed both chambers, places sharp limits on bonuses available to top executives and other high-earners. How sharp? How about this: [Title VII, Section 7001] A prohibition on any compensation plan that would encourage manipulation of the reported earnings of such TARP recipient to enhance the compensation of any of its employees. So …
The Bush administration is hopping mad at the New York Times for a story the Gray Lady published Sunday, “White House Philosophy Stoked Mortgage Bonfire.” The White House will have to defend itself on this one, but we are concerned that the Times, in its partisan desire to tarnish President Bush, provides far too narrow a focus on the government’s central role in creating the current crisis. By pretending troublesome government policies that contributed to the housing bubble began with Bush, the Times makes it easier for those inclined to …
Listening to politicians on the left speak about the current financial turmoil, one gets the impression that when President Bush took office in 2001 there was a perfect financial regulatory system in place. Only since then, they claim, has it been systemically destroyed by the Bush administration. Speaker Nancy Pelosi (D-CA) says, “the Bush Administration’s eight long years of failed deregulation policies have resulted in our nation’s largest bailout ever, leaving the American taxpayers on the hook potentially for billions of dollars.” Barack Obama echoed this sentiment in the final …
Senate Banking Committee Chairman Chris Dodd has announced he wants to pass legislation making major changes in lending laws during a lame duck session next month. But the lead witness at Dodd’s Oct. 16 hearing on the financial crisis, former SEC Chairman Arthur Levitt, recently said “not so fast.” At the end of April, Levitt and two other former SEC Chairmen published an op ed in the New York Times questioning Treasury Secretary Henry Paulson ‘s proposals for reform of the SEC. Rather than pushing their own specific reform proposal, …
There is no doubt that past government intervention in the market, particularly by Fannie Mae and Freddie Mac, is largely to blame for the current financial turmoil. And while past government intervention cannot be used to justify further government interference, we also have to ask how much unnecessary pain the economy must bear. Absent action along the lines proposed by Treasury Secretary Hank Paulson, capital markets at home and worldwide would eventually normalize. But how many large and small companies are going to have to fail to make payroll because …
This morning we highlighted just the worst policy proposal liberals in Congress are trying to attach to the financial bailout plan. But Sen. Chris Dodd’s (D-CT) draft legislation has some other misguided provisions as well. Heritage’s David John flags those that must be avoided: Provide capital to financial institutions in return for equity: As proposed in the Senate draft, contingent shares of either debt or stock would be issued to Treasury at the time a financial institution sold bad assets to the new RTC. If the assets sold for less …
The $700 billion that Treasury Secretary Hank Paulson is requesting from Congress to restore liquidity in the financial markets is a breathtaking sum of money. But it is also important to remember Paulson has already committed $200 billion to recapitalize Fannie Mae and Freddie Mac. The size of their bailout should tip Americans off: Fannie and Freddie were the key enablers of the mortgage crisis. Fannie and Freddie’s implicit government stamp of approval on these risky investments fueled Wall Street’s appetite for subprime securities. As of last June, Fannie alone …
