BreakPoint

BreakPoint: Financial Flim Flam

Folks, the foxes are guarding the financial reform hen house. It’s time to speak out. Loudly! Here we are, after three long years, still enduring one of the most serious recessions in American history. And, as you’ve heard me say many times, it’s an economic disaster we have brought upon ourselves—from ethical failures on the part of Congress, government bureaucrats, Wall Street, lenders, and, yes, ordinary citizens who were either too greedy or lacked enough common sense to realize they shouldn’t buy homes they can’t afford. And we see the wreckage everywhere: lost jobs, houses, depleted 401(k)s, all up in smoke. This is the revenge of secularism, the result of a nation that has lost the Christian work ethic—honest work for an honest wage, delayed gratification, avoiding personal debt. It is what happens when we abandon biblical principles and engage in reckless behavior. And what have we learned? Apparently, nothing. Not one thing. That’s the only conclusion I can reach after seeing that Congress is posed to pass a monstrous, 2,000-page finance reform bill that a) no one, including your elected leaders, understands, and b) simply ignores one of the chief causes of the economic collapse. I say no one understands the bill because the bill’s sponsor doesn’t even seem to know. The Washington Post reports that Senator Christopher Dodd said, "No one will know until this [the bill] is actually in place how it works.” Are you kidding me? But Senator Dodd knows exactly what the bill won't do. And that is clean house at Fannie Mae and Freddie Mac, the very two agencies that the Wall Street Journal called, “the toxic twins of the mortgage industry.” As the Journal opines, “By far the most significant error of omission in the bill is the failure to reform Fannie Mae and Freddie Mac, the government sponsored enterprises that encouraged the origination of risky mortgages in the first place by purchasing them with the support of many in Congress.” And that’s what should have every American citizen enraged. Fannie and Freddie, which pumped out heaven knows how many bad loans, are left un-reformed by a reform bill passed by our elected leaders, who in turn have received millions of dollars in campaign contributions from Fannie and Freddie. How cozy. How corrupt. And how utterly unacceptable. There are other problems with this bill: Does it fix the corrupt system of bond rating agencies, who are paid by their clients for favorable ratings? Are the American people protected from never-ending bailouts of failed banks and corporations? Well, as Senator Dodd would say, “no one knows.” It is grossly irresponsible for the people who brought us this catastrophe to pretend they are fixing it—when all they are doing is adding level upon level of bureaucracy, more government, more spending, all without addressing the fundamental problems. Democracy can’t work this way. The elites are counting on the American people to go back to their iPhones and twitter accounts and forget the whole thing. They’ll take care of things for us. Well, I say this is beneath the dignity of a free people. If citizens do not express their outrage, then we deserve what we get.

FURTHER READING AND INFORMATION

An Iceberg of Financial Reform, but What Lies Beneath? Mike Brownfield | The Heritage Foundation | June 25, 2010 Senate inches closer to passage of financial reform legislation Brady Dennis | The Washington Post | July 2, 2010 Lawmakers guide Dodd-Frank bill for Wall Street reform into homestretch David Cho, Jia Lynn Yang and Brady Dennis | The Washington Post | June 26, 2010 The Dodd-Frank Financial Fiasco John B. Taylor | The Wall Street Journal | July 1, 2010

07/2/10