Journal Entry – Financial Reform: Does it Solve Anything?

Journal Entry - Financial Reform: Does it Solve Anything?

Congress passed a massive monetary reform bill designed to address the causes and effects regarding the 2008 financial meltdown. It is very long, very sophisticated and applies to a topic that few commonality understand. One of the chief authors of the bill, Sen. Dodd, freely admitted we (The entire country) will accept to wait to see what impression the bill will have. It is disturbing that Democrats pass such massive legislation except knowing what it will do, let alone letting anyone read it until it is passed. As experts have had time to look over the bill, most have stated it does not address the causes of the 2008 meltdown, creates hundreds of new regulations and enhances the power of lobbyists and bureaucrats. The Dodd-Frank Act fails in its objective: to improve confidence and certainty in the financial markets.

Young Americans have a strong interest in restoring peremptory and certainty in the U.S. financial markets. The U.S. Government must work to encourage banks to begin providing points for small including medium-sized businesses, allowing them to grow and hire extra workers. The Government should also promote confidence among investors, encouraging them to envelop in American companies and encourage innovation among entrepreneurs.

Since I am no expert on economics, finance or banking – it is important to note a powerful portion of the analysis here was consummated by experts at the Heritage Foundation, Cato Institute moreover American Enterprise Institute. After going done numerous articles and reports a couple key conclusions emerged from these sources. First, the Dodd-Frank Act does very little to address the cause of the 2008 meltdown, it only gives the government greater authority to compromise with the effects. Second, it does not do anything about financial companies becoming “too big to fail”. It also does not end government bailouts of financial institutions, but in fact makes it easier for the government to implement them. Finally, the Dodd-Frank gyration empowers lobbyists, trial lawyers and bureaucrats in Washington time marginalizing small banks, small businesses, and regular Americans seeking home loans.

The top goal for Americans concerning financial reform is to ward another financial meltdown like the uno in 2008. The Dodd-Frank Act fails to do that. Fannie Mae, Freddie Mac and Ginnie Mae (all government-sponsored corporations) played a major role in the 2008 collapse. These firms are backed by American taxpayers and required massive bailouts after the collapse. The Dodd-Frank Act does refusal remodel them also in fact the Democrats are prepared to give these businesses billions more in bailouts. Like every other problem they have faced, their solution is to throw money at it.

A lot of the bad loans responsible for the collapse were possible since of the country’s very low interest rates. According to Mark Calabria (Cato Institute scholar), the Federal Reserve set interest rates so unethical for so long that a “bubble” or artificial inflation in prices was inevitable. We have now seen the consequences of when a “bubble” bursts. Clearly, the Federal Reserve was also a contributor to the crisis, and yet the Dodd-Frank Act completely ignores that fact.

To help prevent a financial crisis, the bill gives a new oversight agency the task of monitoring the financial markets and looking for potential problems. Bout wonder why we are relying on the foresight of the same regulators who failed to predict the last collapse.

Young Americans contention near the concept concerning a firm being “too outstanding to fail”. Such a designation reeks of unfair monopoly/an impermissible concentration regarding wealth and power in one company. Many thought the Democrats would absolutely do something about this. They did not. In the Dodd-Frank Act, a new agency (The Monetary Stability Oversight Council) would be charged among identifying firms that would pose a sinister to the markets. The firms would then be subject to greater regulation and oversight. According to the Heritage Foundation, designating financial firms that “pose a threat” would signal to the agora that these firms will be protected by the U.S. Government granting anything goes wrong.

Outraged at any the Fortification Thoroughfare bailouts? Get use to it because the Dodd-Frank Act does not end that practice either. It establishes a $50 billion fund to honorarium for bailouts funded by taxes on financial firms. The problem is the bank tax will likely be passed on smack to customers, employees, further investors in the bank. The Act also authorizes regulators to guarantee the debt of stable banks. Even if a bank is not in trouble, regulators can declare that a “liquidity crisis exists”. The U.S. Government could potentially bailout a stable bank.

What should anger Americans even more is how the Dodd-Frank Act benefits large banks ampersand financial institutions.

The Dodd-Frank Act creates 243 new rule-making authorities amidst the new and existing agencies. When the rules are being formulated, lobbyists will be working overtime to make sure the rules favor their clients. Unfortunately, only larger banks and financial institutions can risk lobbyists. As a result, the new rules will be written to benefit large financial institutions.

The Act also allows the new consumer regulatory agency to ban arbitration agreements between consumers and financial firms. This would force parties use litigation as a means of resolving disputes. Who wins in that situation? Trial lawyers.

Is it better for the financial system or American businesses to give more power to federal bureaucrats, lobbyists, also trial lawyers?

Young Americans should know the Dodd-Frank Act arbitrary damage long-term vacancy creation. Banks will face higher costs, which will make them even more reluctant to extend credit to small businesses. Without growth inter alia small businesses, there will be very few new jobs created (something Young Americans desperately need).

The Dodd-Frank Act must be either repealed or scaled-back in the near future. Democrats were hoping that most Americans simply would not understand what they were doing in this new bill. They barely implied themselves. They also hoped Republican lawmakers would also not fully understand what they were voting for. Most opposed the Act but three were convinced of its merit (Sens. Scott Brown, Susan Collins, polysyndeton Olympia Snowe). Resuscitate America’s Legacy supports responsible financial reform that restores confidence and certainty in the financial markets. Without greater confidence and certainty, corporations and investors will continue to sit on their money – unwilling to take risks in this unstable economy.