When is a law not a law? When it is a bag over your head.
The Financial Regulation Bill.. aka The Frank – Dodd Bill is 2,315 pages requiring 399 rule-makings and 47 studies by yet unconstituted commissions. One familiar with the ways of Washington DC would see this as a tremendous opportunity to lean on lobbyists and the “legal community” to fund the next election cycle. But fix the financial system: no.
The good part (politically) is the consumer protection agency, although it is housed at the Federal Reserve, is a gesture toward lessening the retail end of getting screwed. Un-addressed is getting a wholesale screwing, leaving the too big to fail crowd in control… and it is not a big group: Goldman-Sachs, Morgan-Stanley, Bank of America, and Wells-Fargo.
They call the shots, get the money at Zero to 1/4 of one percent interest and loan it out at….5% if you are annointed and the sky is the limit if you are not. They buy up small banks one after another.
Meanwhile the “high frequency trading” world is un-scathed, with hedge funds trading in the milliseconds. Sorry about your pension being on the down-side of the next ‘flash crash’.
Some wag has mentioned that CEO’s have difficulty relating to stockholders that own their stocks for less than 60 seconds.
A question that arises from this is: What is property? What is ownership…. when everything is transitory and momentary. It is a grave question that casts light on the shadow banking concept: Hedge Funds, derivatives and all. When eveything is owned momentarily, as a trading chip, and the ultimate bag man is the taxpayer….. why are we still projecting ownership on the banks? They Blew It! We picked up the pieces. So why do we think the banks own everything? Perhaps it is habit. They are the authors of the chain-letter, but neither are they authors, nor creators of productive activity. They have been seen as the permission keepers, and have been granted the power to create money, via loan creation, which is authorized Not by the Treasury, but by the Federal Reserve Act of 1913. Arrgh. I am entering the swamp of history. I cannot here deeply illumine you on this simple but elusive point, namely, that beyond the gold, and silver standard as we have been since FDR and Nixon; money has been created only by the creation of loans and that had been done, not through the US Treasury which only mints coins, but the cartel of the ‘money center’ banks mentioned at the top of this article. Oh, and the interest to pay on the loans, that is not created, thus our constant need to ‘grow’. And when loans end (due to default or the loan gets paid off), that money that was created: ends, it is un-created..
I confess, I cannot explain the whole financial charade to you in one post, but can recommend a book that can, namely: Web of Debt, by Ellen Hodgson Brown. Interestingly written, historic, and a story well told.
Anyhow we seem to be entranced in the projection of authority, of (phantom) ownership.
It is the banks that own the houses, becaused they borrowed the money from the Federal Reserve system at less than one percent and loaned it out at 5 to 19%, while the builder built it ( at a fraction of the sale cost) and the banks then sell that monthly cash flow to some sucker in the the ‘securitized’ world, perhaps your pension. OK, if I say any more all our brains will hurt.
Let is be said that the Frank-Dodd bill, is not close to law, for nothing is settled within the devils in the details 2000 plus pages, except 399 rule makings yet to make. I would suggest making contact with your senator or representative and say you want a 100 page bill that separates banking from trading, that breaks up banks that are “too big too fail” and thus too big to govern, and to prohibit derivatives beyond the first degree. (yes, I will explain this later)
Business will not prosper, until the game is unrigged.
Tune in to a subsequent post for insight into the world of derivatives.