Bank Regulation: Obama’s Bad Joke

Only the Congress of the United States is capable of this sort of monumental stupidity. It appears as if the responsibility for running a newly formed council of bank regulators is going to be delegated to the Treasury Secretary.

Let me rephrase that. The job of overseeing our financial system is going to be given to an individual whose primary job is implementing the political agenda of his boss — the President of the US.

Regulation of the banks and whatever else gets thrown into the mix is now going to be driven by politicians who have little or no interest in a safe and sound banking system. As we know too well, their primary interest is the perpetuation and enhancement of their own power with no regard for the consequences.

Should this come to pass then we can expect regulation to morph into nothing more than the reflection of the particular bias of succeeding administrations. It will ensure a steady stream of cash from Wall Street as they seek to further bend rules to their advantage while any notion of a consistent regulatory philosophy flies out the door.

In many respects, this amounts to if not the emasculation of the Fed than certainly its marginalization. While Bernanke may have received a pass for his role in the bubble and subsequent rescue efforts, this turn of events may well provide a very sad obituary for his terms indeed.

I need to say nothing more than to offer this quote from James Bullard, the president of the St. Louis Fed which is contained in the NYT article on this turn of events:

But some in the Fed remain skeptical. James Bullard, president of the St. Louis Fed, said in an interview that Mr. Bernanke had been “too kind” in accepting blame for regulatory failings, given the failings of other regulators, from the Federal Deposit Insurance Corporation to the Office of the Comptroller of the Currency.

“If he’s giving up, it’s because he’s somehow making some calculations about what the realities are,” Mr. Bullard said.

“But I’m telling you, this business of how we’re going to give this to a committee and we’re going to have an effective response to the next crisis. That is a joke.”

About Tom Lindmark 401 Articles

I’m not sure that credentials mean much when it comes to writing about things but people seem to want to see them, so briefly here are mine. I have an undergraduate degree in economics from an undistinguished Midwestern university and masters in international business from an equally undistinguished Southwestern University. I spent a number of years working for large banks lending to lots of different industries. For the past few years, I’ve been engaged in real estate finance – primarily for commercial projects. Like a lot of other finance guys, I’m looking for a job at this point in time.

Given all of that, I suggest that you take what I write with the appropriate grain of salt. I try and figure out what’s behind the news but suspect that I’m often delusional. Nevertheless, I keep throwing things out there and occasionally it sticks. I do read the comments that readers leave and to the extent I can reply to them. I also reply to all emails so feel free to contact me if you want to discuss something at more length. Oh, I also have a very thick skin, so if you disagree feel free to say so.

Enjoy what I write and let me know when I’m off base – I probably won’t agree with you but don’t be shy.

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