Wednesday, May 19, 2010
Congress will save us from Wall Street, Obama said in his weekly radio and internet address. The bill in Congress will curb predatory lending practices, prevent banks from taking on too much risk, and give shareholders more of a say, Obama insisted. “Put simply, Wall Street reform will bring greater security to folks on Main Street. My responsibility as president isn’t just to help our economy rebound from this recession; it’s to make sure an economic crisis like the one that helped trigger this recession never happens again,” he said. “That’s what Wall Street reform will help us do.”
|The Democrat Borg collective show its support as Obama visited Buffalo, New York.|
Right. And I have a bridge for sale in Brooklyn.
In fact, the Senate “financial reform” bill does almost nothing to “reform” Wall Street. It leaves the derivatives market in place. It does nothing to address the $1.5 quadrillion derivatives crisis threatening to smash the global economy like a bug. Derivatives and securitization are the primary toxins at the core of the current crisis. The Senate has fashioned a bill with a loophole you could drive a Mack truck through — a truck loaded up with derivatives.
How will the Democrats protect us from Wall Street? Senate Banking Committee Chairman Christopher Dodd’s “reform” bill claims the government will crack the whip over the derivatives market by mandating that most trades go through a clearinghouse, a scheme that will supposedly shed more light on secret market trading and allow for government regulators to more effectively police derivatives.
But there is a problem. There is absolutely no consequence if firms evade the requirements. The bill “includes a brief section that completely undercuts that new rule,” writes Zach Carter. “Under the current bill, there is no penalty for anybody who fails to centrally clear their trades — even though the bill labels this activity illegal. What’s more, even though this behavior is illegal, the trade itself is still valid. In other words, banks are required to bring their trading into the open. But if they don’t shed light on their trades, nothing will happen to them. I wonder what banks will choose.”
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In short, JPMorgan Chase, Bank of America, Citigroup, Goldman Sachs and Wells Fargo — representing 97 percent of the total activity in the U.S. banking system and the equivalent of 60 percent of GDP — will continue to trade derivatives under the cover of darkness. It will business as usual on Wall Street. The engineered destruction of the economy will continue unabated.
The snake oil salesman and teleprompter reader Obama will do nothing to save you and your family from impending doom. If Obama was serious about reforming Wall Street, he’d show Larry Summers and the other bankster operatives in his administration the door. Summers and his pal Robert Rubin were responsible for killing off the 1933 Glass-Steagall Act during the Clinton administration.
Repealing Glass-Steagall allowed monsters such as Citigroup to underwrite and trade instruments such as mortgage-backed securities and collateralized debt obligations and deliver the economy to the periphery of destruction.
This article was posted: Wednesday, May 19, 2010 at 8:04 am