Saturday, March 29, 2008
Who likes Bush proposal?
The alphabet soup agency names are confusing, but U.S. residents can be sure of one thing if President Bush gets his way on a proposed overhaul of regulations overseeing the financial services industry — more will be less. The purpose of proposals to switch regulatory power from one agency to another and to expanding the power of the Federal Reserve is not to improve government oversight but to do the opposite — to insulate Wall Street financial powerhouses from the wrath of the people affected by their misdeeds. Removing the power to regulate Wall Street from the Securities and Exchange Commission, a government agency, and transferring it to the Federal Reserve, which is independent of the government, is the centerpiece of the Bush proposal, and it's not hard to see why. The plan is being sold as a way to give the Federal Reserve more power to control what happens on Wall Street, where respected companies are being steamrolled by the credit crisis that brought down the mortgage industry. But how is reducing government control of the economy going to increase government's ability to oversee the economy? It isn't, and it's not intended to. The collapse of Bear Stearns, the nation's fifth-largest investment bank, which had to rescued by a government-arranged buyout by JP Morgan Chase, is a warning of what is ahead. Because while bureaucrats and money managers bicker of whether the $2 per share price of the buyout was ridiculous or not, thousands of workers are losing the retirement savings they spent decades accumulating. The financial sector is backing the Bush proposal — like the major players would ever support increased government scrutiny. That alone should tell everybody what they need to know.