Even though most of the failure of the last few years belongs right on the shoulders of the man orchestrating the financial reform bill, Barney Frank and his blind eye to the GSE’s, and other key Democrats who applauded the repeal of Glass-Steagall they are now going to pass financial reform. Worst of all they are putting more trust in the ultimate of failed institutions, the Federal Reserve and the FDIC, with even more power to regulate financial firms.
Essentially, anyone who encouraged, allowed and missed all the events that led up to the credit collapse of last year is now getting more power to make sure it doesn’t happen again. So much for ever going long equities in my lifetime again. The systemic risk bill would grant vast powers to a new systemic risk regulatory council, the Federal Reserve and the Federal Deposit Insurance Corp to monitor and address risks to economic stability posed by shaky financial holding companies.
Those deemed severely undercapitalized by the council could be restructured or even shut down by regulators. Managers could be dismissed, credit exposures limited, pay and bonuses restricted, acquisitions and new ventures blocked. Capitalism is now official dead and no one has been able to locate its body, but there is a toll free number to call with any tips, 1-888-ASK-4KEN.
We now know where the FDIC will get its funding from all the potential failures from in the near future as banks and other institutions are now forced to fund it themselves. Here is what the article says: “It also attempts to shift the cost of future financial stabilization efforts toward industry and away from taxpayers by forcing financial firms with more than $10 billion in assets to foot the bill for any losses from Federal Deposit Insurance Corp actions to resolve the problems of failing firms.”
Who knows what that officially means as no details are available yet as the bill just made it out of committee, I am sure more details will be available soon. Frankly, I think it is a good thing that the taxpayer will be off the hook, but I will believe it when I see it since it has been known for decades that the government will bailout banks if they get into trouble, and proven twice now. I am also pretty sure the taxpayer never asked to bailout the banks anyhow, all the people with the signs in front of Wall Street and Congress last fall should have tipped off lawmakers, but Congress did it anyhow.
What scares me the most is that Geithner is actually in favor of this reform. Why does that scare me? Geithner is not exactly the smartest guy in the room and has never been in the private sector and is a little too cozy with Wall Street. Plus, he could not figure out his own taxes, the IRS is under his direct control, so ponder that for a bit.
The really good news is that the one part of our system that was not broken, hedge funds and private equity funds, will now be forced to register with the government. These are the smartest guys in the room who actually made money last year and while they are not perfect, they did nothing wrong. What risk do they bring to the table? They had nothing to do with bringing the system to its knees unless they wrote mortgages and levered up 60-to-1 with CDO’s. It is the Lehman’s, Bear, Sterns, Merrill Lynch’s, Citi’s, Wachovia’s and the Fed that messed up, not hedge funds, but make them pay that makes sense.
Along with this bill Frank is also voting on a credit rating agency bill, consumer watch dog agency bill and bringing in the head of the CFTC apparently to tie everything together. Who knows where everything will end up as these things change a lot between committee and the actual vote in Congress. Also, Republicans and lobbyists are pushing back, but they will surely get shut out quickly. This bill will likely weigh on the markets on Wednesday as when the news hit the wires the futures went negative.
The “Friends of Angelo” strikes again and the self righteous do-gooder Democrats still maintain that this V.I.P. program from Countrywide was no big deal. Look, the Republicans are no better and bear as much responsibility as anyone else for this mess, but at least they are not pretending that they did nothing wrong, well to the degree that the Democrats are. So far the Friends of Angelo program has caught up Senator Chris Dodd, Senator Kent Conrad and now, apparently, Representative Edolphus Towns all who got mortgages through Countrywide all with the special code identifying them as being part of the Friends of Angelo program.
Now, to assume there are no special favors associated with the Friends of Angelo program would be making the same assumption as the Sun revolves around the Earth, it simply can’t be true. Rep. Towns says that this V.I.P. program, only available to politicians, HUD officials and Fannie, had no special features other than faster processing times is just plain stupid, there I said what every other newspaper wanted to say, but can’t. Are we simply dumb enough to believe that mortgage companies offer, as Representative Towns claims, a “frequent flier” type programs for mortgages? Listen, Mr. Politicians, the average American, which we are well aware that you think you are not, get 1 mortgage during their lifetime, 1, so to assume there is any type of frequent mortgage program for people is laughable at best.
I know, the “ethics” committee cleared Senators Dodd and Conrad, of course they did, have you met an ethical politician yet? It’s a freaking joke, the numbers were right there in Dodd’s case he saved $75K over the life of his mortgage because the interest payments were reduced to magically attractive levels. I know math is not Washington’s strong point, but they could have called in TurboTax Timmy to run them for him, well maybe he isn’t the best person, but still Wall Street owes Washington a favor or two so they could send a bean counter up to sort out the problem.
Anyhow, Rep. Towns is so sure he is innocent that when Rep. Issa called hearings on this issue he and all the other Democrats walked out the backdoor like a bunch of 5 year olds, and that is insulting to my 5 year old. Instead, Rep. Towns threw his spokesperson to the wolves and is avoiding the issue altogether which about sums up or representatives in Washington. Now, here is what she says:
“He went to his local mortgage guy and got a normal mortgage,” she said. “The guy’s from Brooklyn and doesn’t have much money and wasn’t prominent enough to be considered a V.I.P. Whether it was later transferred through the V.I.P. program, I don’t know. But he didn’t receive any favors.”
Seriously? Not a guy with a lot of money? How does a guy with not a lot of money afford a home in Brooklyn and in Hillsborough County, Fla.? Rep. Towns also wants to get to the bottom of all of this fraud so badly that he will not even subpoena Countrywide, why? Because he knows a lot of unflattering material will come back, maybe not about him, but perhaps some other people, hint, hint Senators. Perhaps maybe some other potentially embarrassing names may pop up as well that are new to the game, for the love of God, Barney Frank forgot to file a $107K bank account in his annual financial statement.
The bottom line is this, we are not stupid and we know that our politicians are bought and paid for by big business. We know they looked the other way while they sold bad loans to people, but the citizens need to take some responsibility as well. If you made $800 a week you should have known that under no circumstances could you afford a $500K house. However, Congress is making an ass out of itself by chasing ghosts because if you want to catch the real crooks you need to get a panel of real people, like me, with Bernie Madoff leading the charge, hey hate him all you want, but you need a crook to catch a crook, and let’s go after every politician who screwed up. After we are done, I move to pardon Bernie and make him Fed Chairman or Treasury Secretary because the man knows how to keep a Ponzi Scheme going and that’s what the US needs long-term.
So, go on Rep. Towns, Sen. Dodd, Sen. Conrad and get your deals with Countrywide and pretend you did nothing wrong. Pretend that you did not know what V.I.P. meant, you are either incredibly stupid or you are lying, I will flip a coin because it is about a 50/50 shot at this point, but either way you gotta go! I think we have all just about have had enough of the BS from Washington. We wanted change and we got, I don’t even know what we got anymore.
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