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Dorgan: Financial Regulation Not a Four-Letter Word |
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Congress must pass strong, effective financial regulations to prevent another economic meltdown and to protect the American consumer, a leading senator said. Speaking this morning at the New America Foundation, Sen. Byron Dorgan (D-N.D.), said the nation’s economic wreckage can be traced back to the decision a decade ago to deregulate the financial system.
Not only did deregulation open up opportunities and incentives for risky banking behavior, but federal regulators who were supposed to be watching the financial industry weren’t doing their jobs, Dorgan said.
As early as 1994, Dorgan warned of the risks posed by one of the key ingredients in the recent financial collapse: the complex financial packages known as derivatives. In a Washington Monthly magazine cover story, “Very Risky Business,” he predicted the cascading failures of large lending institutions, the collapse of Fannie Mae, taxpayer-funded bailouts.
The current economic mess grew out of an “avalanche of greed,” he said, after the passage in 1999 of the Gramm-Leach-Bliley Act, which repealed Depression-era banking regulations. He was one of only eight senators to oppose the bill, and at that time he said deregulation “would raise the likelihood of future massive taxpayer bailouts.”
The best solution now is to establish regulations that restore protections to the financial system for consumers, Dorgan says. We should regulate derivatives and hedge funds and separate traditional banking from risky speculative investment banking, he says.
During a question and answer session, Dorgan said “regulation is not a four-letter word.”
Regulation is essential for a free market system. You need a referee to call fouls when someone breaks the rules. We must have much more aggressive regulation to make [financial reform] work.
A recent poll shows Americans want strong regulation of our nation’s financial markets. The poll showed that more than two-thirds of voters surveyed support creating a Consumer Financial Protection Agency to look out for consumers.
Congress must also address the issue of what to do with those banks that have been dubbed “too big to fail,” Dorgan said. During a recent forum sponsored by the Economic Policy Institute (EPI), panelists pointed out that the nation’s four largest bank holding companies control nearly half of the bank assets in the country—almost double the amount they controlled in 2002—not a good situation for our economy.
The biggest threat: All these banks are carrying billions of dollars in bad debts. Their weak balance sheets make them hesitant to lend the so-called zombie bank phenomenon. But their financial weakness is paired with political power, power that may not be consistent with our democratic principles, says Damon Silvers, deputy chair of the Congressional Oversight Panel. Silvers also is associate general counsel for the AFL-CIO.
Dorgan added that he does not put much faith in the latest stockmarket rally which was triggered by huge profit statements by Wall Street investment banks.
The most important fact about the long-term growth of this economy is not how much an investment bank made. [It's] how many people are put back to work. A good job that pays well is better than any social program I know.
You can check out a video of Dorgan’s speech here.
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You know, Dorgan talks a big game, but he is a prominent member of the Democratic Leadership Council: The GOP with a side of abortion. This ONLY way to fix what ails America is the EMPLOYEE FREE CHOICE ACT. This is an article I wrote on the subject that will be in next Thursday’s Fox Valley Labor News:
The Employee Free Choice Act, just like the public option for healthcare - has never been an option. Both have zero chance of passing through the U.S. Senate because Democrats from non-union states will block their passage.
Socialized capitalism has destroyed America; union small business owners are just a scapegoat. Since 1990, the AFL-CIO has donated $59 million to politicians, mostly to Democrats, but union members can opt out on their dues being used for political campaigns, and many do. Meanwhile, the Big Three has donated $100 million to politicians in that same period, mainly to Republicans. Blaming unions is not only unfair - it’s a lie.
Healthcare costs rising over 250% since 2002 only played a small role in GM’s failure. General Motors discovered they could make more money selling cars by financing them through their GMAC Bank than they could manufacturing them. In 1999, when investment banks got free reign to dabble in mortgages, GM opened GMAC Mortgage. Obama completely screwed the UAW in that GM deal. Oh no? Read this:
http://www.gregpalast.com/grand-theft-auto-how-stevie-the-rat-bankrupted-gm/
The New Deal did not pull us out of the Depression, WWII did. We were the only country not devastated by war, and the other countries were not completely healed until about 1970. Before that, America enjoyed a long period with no competition. We were the world’s producer of goods, but the wages of American workers always rose with production.
That changed in 1970. Rather than export our “way of life” wages and work ethic to newly competitive countries, we blamed the “greedy, lazy” American worker instead. But the infamous “alligator” jaw chart proves that’s a lie too. American workers’ production rates represent the top of the jaw, what they were paid is the bottom. The top of the jaw shot up year after year, while the bottom stayed in one line since 1972.
So, how have we been sustaining our “American way of life” since then? That’s easy. The area in the gaping alligator jaws represents corporate profits. Enter CEO’s making hundreds of millions a year for successfully keeping the bottom of the jaw stagnant. Enter companies putting the extra profits in the bank. The banks were stuffed, what did they do to invest the money? They lent it back to American workers - with interest. If it’s true that Americans know better how to spend our own money, wouldn’t it have been smarter to give some of that jump in the workers own production back in wages, not credit? Capitalists thought no, let’s “pay them” in unsecured credit cards instead and they can “pay us back” at 18% interest, or they can borrow from the equity in their homes. We’ll keep interest rates falsely low to draw them in, and if they can’t pay it back, we can just take it back by making the government bail us out.
The only one’s in America who didn’t go along were union small business owners. To call them un-American, Communist or Socialist is preposterous. They didn’t need the government to force them to take personal responsibility for their company and their employees, and they never asked the taxpayers to pick up the tab either. All they have ever asked was for the government to stop subsidizing the healthcare, housing, food and educations of their competitions’ employees and their families, and to stop those same competitors from hiring illegal immigrants.
Unions do pass the cost onto the customer, but why are non-union companies cheered for threatening to do that if you dare charge them an extra penny? Wall Street blew the thirty grand I put down on my home and my husband’s union pension on their quasi craps tables. They just got $750 billion more, the largest transfer of wealth in American history, and now they are coming back for more by blocking healthcare reform with my insurance premiums? They were one shot away from being allowed to gamble away our social security too.
Rather than give transnational corporations billions in federal subsidies and tax breaks, cut off their socialized security forces: the Army, Navy, Air Force Marines. That socialism is one third of our federal budget. Tell downstate Illinois, who lives the high on the hogs (pun intended) off farm subsidies, to stop slamming Chicago. Chicago and her suburbs pay the bills in Illinois; in taxes and for illegal immigrants who are here partly because the corn lobby, since NAFTA, gets $25 billion a year in farm subsidies to export two thirds of Mexico’s corn.
Capitalism is a religion; it’s why Conservapedia is now even accusing Jesus Christ of “liberal bias.” Congress cannot establish any religion, let alone fund it with tax dollars. Government regulation won‘t fix anything. FDR’s regulations made the current political climate what it is. Ever since, corporations have spent billions lobbying Congress to defeat the regulations, and they finally won. And because they did, Democrat or Republican, our votes are worthless.
The opposition knows if the Employee Free Choice Act passes, that gaping alligator mouth will close, not completely or even close, but they don’t want it to close at all, so they are showering millions more of our production dollars on Congress and brainwashing American workers into forfeiting their right to democracy in the workplace as well. I’m sick of the poorest states in the country lecturing mine about economics. The Employee Free Choice Act should be on the state ballots in 2010. Let’s settle who’s right and who’s wrong once and for all - by watching as the states with EFCA fare much better than the ones who don’t.
@Thomas
“Conservatives didn’t have the numbers the Dems have now. They couldn’t push it through.”
GONG. They used reconciliation to pass the things they wanted to pass - they didn’t use it on the things they said they wanted to pass but really didn’t want to - like banning abortion, passing a fed marriage amendment… (issues that are too valuable a commodity at the voting booth to rectify) Bush could also have signed an executive order as well, and he used signing statements all the time.
The problem is that right and left doesn’t get that BOTH parties are OWNED by the same people! The Dems are doing it now with healthcare. They don’t need Republican votes or amendments, and they could use reconciliation to cover the “Blue dogs” too - but they wont. They are bought and paid for my insurance lobbyists as well. The Public option was NEVER on the table. But they pretended like it was to get their side to freak - and the right pretended like it was to get their side to freak. The right will say its “their victory” when it doesn’t pass, and the Democrats who really were the reason it didn’t pass are fine with them taking the blame - because it takes the heat off them from their base. Go to Bill Moyer’s Journal at pbs.org and read the transcript of the interviews with Wendell Potter, David Frum and ESPECIALLY the one with Dr. Mary Flowers and Nurse McEwin.
The Dem congress didn’t even invite single payer advocates (single payer and UV healthcare are VERY DIFFERENT THINGS BTW) to even have a seat at the table - and when they showed up anyway MAX BAUCUS HAD THEM (DOCTORS AND NURSES) THROWN OUT - AND ARRESTED. Could you imagine if BUSH had done that????? Just - WOW…
“However, I will say this.
I do not give the Repubs a free pass. They did lose their conservative path and paid a dear price.”
What exactly is a “conservative” anyway Thomas??? Go to the Webster’s dictionary online, type in “liberalism” and see what “economic liberalism” is defined as…
“Yes, they have gotten rid of big government, by down sizing under Reagan and Bush 1.”
Please show me instances where Reagan and Bush Sr shrinked the size of government, or where they cut government spending.
” Clinton built it up huge, again.”
Please show me instances where Clinton “built the government up huge?” BTW, I think Clinton is a SCUM BAG. The economy was good when he was pres because Bush Sr, strapped with debt from Reagan’s excesses knew he had to renege on his “read my lips, no new taxes.” He was right to do that, but that didn’t take effect until Clinton already won. That, and Bush Sr’s Sec of Defense, Dick Cheney, suggested major cuts in the military budgets on his way out because the Cold War “ended.” Granted, all the neo-liberal policies that Clinton signed were carry overs from the first Bush admin - but that didn’t mean Clinton had to sign them - and then BLAME THE REPUBLICANS.
See a pattern here??? They are ALL completely full of shit… Pitting fellow Americans against one another with their concocted dog and pony shows and lies. They do this to either keep the seats they have or take it from the ones who are in them. THE END. And they bring in poor and unsuspecting people like Joe the Plumber to make it look real. But the only thing that is real is that we - the American people, no matter what your background or beliefs are - will all get screwed together in the end. And when we do their dirty work for them, by being uninformed and then divided as a result - we screw each other, and ultimately - we screw ourselves!
Scapegoating Bush Jr and Obama - gives all the people behind the Wizard of Oz curtain EXACTLY the distraction they need to carry on betraying our country. They have been cowering back there for decades, doing things in other peoples names, and when the shit hit’s the fan, that push the Wizard in front of it and run (Bush Jr. is a prime example.) And its a bi-partisan effort! Don’t kid yourselves!
Deregulation/Regulation is a false issue.
Regulation, is in some awys well-intentioned, but in other ways a scheme of self-perpetuation of bureaucrats, some directly associated with the remaining strongholds of the AFL-CIO, AFSCME ans SEIU.
That was not meant as an attack on those Unions, I invite their leaders and constituents to participate in the progress that I have in mind.
The issue of financial regulation is similar to the private (and quasi-public) sector health insurance practice of Utilization Management. It may serve a necessary “sentinel effect” on industries that are rife with greed, but at what bureaucratic costs?
Implementation of regulatory processes also qualify under the banner of futility, as do well meaning initiatives such as “truth in labeling”, OSHA, and organic certification.
We don’t need regulation, we need true fundamental reform.
With regards to “nationalizing” Banks and other “investor owned” Institutions, we must be realistic concerning the inter-national composition of the investing institutions, corporations, and individuals.
Writing from a libertarian socialist point of view, I think it is necessary to clarify the objectives of any comprehensive program to re-dedicate private resources to a quasi-public mission and to consolidate equity and assets for the purposes of sharing the former and writing off the economically paralytic inflationary cost aspects of the latter.
In lieu of an economic system based on credit and equity trading, whose motivation is the underwriting of speculative ventures, and profit-taking, we need to transform our fundamentally inflationary financial/economic system to one that is based on equity sharing and meeting the needs of people in the form of community betterment.
Such a financial system would be the right hand, the resource allocation facilitating function and services of an ambidextrous ecological, democratic, economic “plan and implement” economy that would respect and favor the sovereignty of villages/neighborhoods, educate-foster-facilitate-inculcate inter-community and inter-regional equality, unity and cooperation based on the basic principles of inclusion, equity, humanity, mutualism, altruism, quality of life (in lieu of standard of living), environmental/public health and wellness, sustainability, and peace.
Such a system would seek to establish a more just balance between competitive advantage and comparative advantage with the concerns of those indigenous to all communities being paramount.
Such an economic system would recognize the necessity to embrace and implement conservation ethics for shorter term programs and projects of ecological economic redevelopment dedicated to survival pursuits and skills and its concomitant ubiquitous environmental improvement activities, and to the longer term programs and policies related to the legacy of the human race and its dominion (i.e. the recognition and respect of the resource limits imposed by a finite planet).
I call such a proposal an equity union and believe it to be a prudent and practical alternative to the extant economic/financial system. I believe such an economic rearrangement based on the fundamental mission of world unity and cooperation is the best hope for the purpose of entering an unprecedented era of peace and human progress and success.
Please respond.
Be not afraid of losing with respect to your personal private interest. There is more than a plethora of work to be done in fostering and facilitating the transition to a new financial/economic era and the repercussions for letting the death of empire just run its course.
The first thing we must do is clarify our mission and principles. I hope that I have been clear at doing this here and among the other posts of which I have been trying to maximize circulation.
If the mission and principles are clear and desirable, then we need to form “union” with respect to their purposes, their education, their inculcation, their meaning to one and all, and the actions that we can all take to make such a purposeful, desirable world a reality.
We are in perilous times, and facing challenges that although having precedent, are unprecedented in the enormity of the fundamental change that is required. Fortunately, we have communications technology like we have never had before.
Let’s not trivialize the fulcramatic shift needed in the financial/economic sector (i.e resource allocation) by bickering about regulation, an ineffectual solution to the very real problems that we as people must address and act upon.
In Peace, Friendship, Community, Cooperation, and Solidarity,
Mike Morin
Eugene, OR, USA
wiserunion@earthlink.net
(541) 343-3808