A 2000 page bill that calls for more than 350 regulatory rule-makings, 47 studies, 74 reports will cause major uncertainty, making it harder for business to raise capital, make investments and ultimately create new jobs going to be called either the Frank Dodd Act or the Dodd Frank Act. Source: Tom Donohue, President and CEO, US Chamber of Commerce
What we call this bill is very important, since the bill does nothing to help regulate financial markets. Giving it the proper name is, frankly, more important than making it law. If we could just skip the ‘making it a law’ part, well that would be great.
Frank and Dodd, the financial geniuses behind Freddie and Fannie Mac, didn’t bother to do a cost-benefit study on the effect on end users. If Dodd-Frank passes the Senate, U.S. companies could be forced to put up an additional $1 trillion in collateral to continue using derivatives to reduce their business risk.
It’s not like there was never a discussion on collateral requirements, there was and it was soundly rejected. Congressman Barney Frank and Senator Chris Dodd pulled an all-nighter to finish the bill before an arbitrary political deadline set by the White House. At 5:08 a.m. on Friday, June 25, the bill passed with the added $1 trillion cost to American businesses who have any dealings with derivatives.
The bill, frankly, is a bill of A Trillion Unintended Consequences. The treasurer of FMC Corp, a chemical manufacturer, said his firm will have to put up $1.5 billion in collateral, which means they can’t spend that cash on building plants and hiring workers.
“The Dodd-Frank Act is an Empty Effort at Financial Reform”
Congressman Kenny Marchant (TX-24) issued the following statement after the House passed the “Dodd-Frank Act” (H.R. 4173), which fails to reform Fannie Mae and Freddie Mac and will place more unrestrained power in the hands of irresponsible regulators.
“Today House Democrats chose to ignore the root causes of our financial meltdown and plowed irresponsibly ahead with an empty, politically motivated effort at “reform” that will continue to thwart our economic recovery. I, along with many of my fellow Republicans, am a staunch advocate for meaningful reform. However, this bill offers no such thing. A majority of its 2,300 pages are hollow and superfluous powers, and the rest takes punitive measures against those who had nothing to do with the financial crisis.
“While the risky behavior of those in the subprime mortgage industry infected the lion’s share of our financial sector, the regulators were asleep at the switch. Unfortunately, it is these very same regulators–many of them now top economic officials in the Obama administration–who are the real ‘winners’ in this bill.
“The American people would be well served by subjecting large financial institutions to structured bankruptcy proceedings. Instead, the Dodd-Frank Act institutionalizes ‘too big to fail.’ The American people would be well served by reforming Fannie Mae and Freddie Mac. Instead, we ignore them entirely and give them unlimited access to taxpayer money – a cost that could reach $380 billion. The American people would be well served by instituting an exacting standard for regulators. Instead, we just create more of them. Perhaps most importantly, the American people would be well served by implementing policies that empower businesses large and small to create jobs and spur economic growth. Instead, we penalize community institutions with burdensome changes to capital requirements, penalize large institutions with nearly $6 billion of increased FDIC premiums, and penalize non-financial institutions with limits on their ability to manage risk.
“This bill does not best serve our constituents. While they are demanding Congress to reign in spending, this bill hikes taxes and makes bailouts permanent. As a proponent of limited government, we must force the private sector to pay for their own mess through traditional bankruptcy rather than strap it on the backs of American taxpayers. Despite the vigorous opposition of the bill, Democrats continue to pass partisan legislation and ignore the voice of the American people.”
Where is the media on all of this today? Well if you are the Wall Street Journal, other financial news service, or a blogger, there are plenty of articles.
But if you are with the main stream media, you get no balanced news just one short story on Obama getting his way:
CBS News Reports:
A search on NBC news on this bill results in no stories.
A search on ABC news on this bill results in no stories
Here are other great stories on the Dodd Frank Act:
Forbes: banks aren’t pleased.
Washington Independent: Final Count: FinReg Orders 68 New Studies
Free Enterprise: Financial Regulation Bill Lacks Real Reform
Financial Times: Dodd-Frank bill is no Glass-Steagall
Other interesting read:
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