May 19, 2010Today, after hours of delay, Congress still couldn't get on the "Restoring American Financial Stability Act," a bill that supporters sayis needed to prevent the next financial crisis and rein in Wall Street. For various reasons, members of Congress though the bill would either "get tough" on the wrong actors or not tackle the real problems And many investors, entrepreneurs and consumers on Main Street are also pointing to the bill's omissions and possible unintended consequences of regulation that's rammed through.
Here are areas where a wide variety of experts think the bill falls short:
One unintended consequence the Senate already fixed was a measure that would have been devastating to venture capital, angle investors, and numerous entrepreneurs. CEI and other free-market policy groups, as well as organizations representing the angel investors that put money...
May 13, 2010
Give Dick Durbin some credit for his chutzpah. It’s not every lawmaker who, in proposing an amendment to a financial reform bill ostensibly aimed at targeting “fat cats,” would admit that the inspiration for his measure was a Fortune 500 CEO.
But that’s just what the Senate Majority Whip who represents Illinois did when introducing his amendment to the financial regulation bill to control how much credit and debit card issuers charge merchants to process their cards. In a Monday speech on the Senate floor, Durbin related how he was moved after the CEO of Deerfield-Ill.-based Walgreen Co., the nation’s largest drugstore chain, contacted him to bellyache about these costs.
“I had the CEO of Walgreens contact me last week,” Durbin related on the floor, “and he told me that when they look at the expenses of Walgreens, …it turns out the fees that Walgreens pays to credit...
May 5, 2010General Motors’ false advertising that it has paid back its bailout money “in full” has prompted harsh criticism. Yesterday, Competitive Enterprise Institute Attorneys Hans Bader and Sam Kazman filed a complaint asking the Federal Trade Commission to investigate these claims, noting that “GM has only repaid a fraction of those funds—barely ten percent, and “moreover, GM apparently repaid its loan by using other federal funds [emphasis in original]”
Criticizing both GM and the Obama administration for trumpeting the “in full” claim, New York Times liberal business columnist Gretchen Morgenson proclaimed, “Employing spin and selective disclosure is no way to raise...
April 27, 2010Yesterday, the Senate failed to achive the 60 votes necessary to move forward on the Restoring American Financial Stablity Act. All Republicans present and Sen. Ben Nelson (D-Neb.) voted against the bill in a 57-41 that was three short of cloture.
CEI, along with a broad spectrum of groups in the Center-Right coalition, signed a letter expressing opposition to the bill's bailouts, taxation and overregulation. On the latter point, there is widespread concern about a giant new bureaucracy created by the bill called the Consumer Financial Protection Agency that would have a $700 million budget and little oversight by Congress or other agencies.
What alarms many market-minded individuals is that advocates of the CFPA say it will not just police financial products that are fraudulent or...
April 23, 2010Below is a letter sent today to the Senate that was signed by several prominent groups in the Center-Right Coalition expressing “grave concerns about the ‘Restoring American Financial Stability Act’ and its negative impact on Main Street.” The letter has been signed by a broad spectrum of the Center-Right coalition, including this author on behalf of the Competitive Enterprise Institute; economic conservative stalwarts Grover Norquist and Tim Phillips on behalf of, respectively, Americans for Tax Reform and Americans for Prosperity; and veteran conservative activists Phyllis Schlafly on behalf of Eagle Forum. Also signing on are two energetic new grassroots groups that speak on behalf of much of the Tea Party movement: Tea Party Express and American Grassroots Coalition.
The letter, printed below, highlights what it calls “a by-no-means exclusive list” of major...
April 16, 2010Today, the SEC charged giant investment bank Goldman Sachs with more than $1 billion worth of securities fraud for its dealings in the subprime mortgage market.
Ironically, at the same time the SEC is seeking justice for Goldman's alleged victims, President Obama and Senate Banking Committee Chairman Chris Dodd (D-Conn.) are pushing a bill would reward the firm with potentially billions of dollars by instituting a so-called "resolution authority" that would, in practice, be a permanent bailout fund.
Supporters of Dodd's bill maintain that it does not create bailouts because the failing firm's shareholders would be wiped out and its managers would be fired. But what they don't say is that the money from the $50 billion resolution fund would be used to frequently give creditors of this firm a better deal than they would have in bankruptcy.
Recall that during the financial implosion of...
April 9, 2010It is good that the commission, after several months, is finally visiting the role of Government-Sponsored Enterprises, but the setup of today's hearing is still providing a far from adequate investigation. Former CEO Daniel Mudd came late in the game from 2005 to 2008, and the commission must call Mudd's predecessor, Franklin Raines, to give testimony about his tenure as CEO in which so many expansions were made and policies were put in place that contributed significantly to the crisis. Having Mudd testify without Raines, would be like hearing only from Ben Bernanke but not Alan Greenspan about the activities at the Federal Reserve.
Still, because of the facts brought forth in Greenspan’s testimony on Wednesday, and the diligent questioning of commissioners< Peter Wallison and Keith Hennessey some revealing facts came out that demonstrate that Fannie and Freddie played an even...
March 29, 2010Headquartered in Melbourne, the second largest city of the land down under, National Australia Bank is firmly attached to its home country. The primary trading venue for stock in the bank is the Australian Securities Exchange in Sydney, Australia’s biggest city. It was from this exchange shares in the company were bought by three Australian investors who are now suing the firm for securities fraud.
So see if you can guess in which Australian locale this lawsuit is proceeding. Melbourne? Sydney? Perhaps in the Australian state or territories where one of the shareholders live?
Sorry, trick question! The lawsuit isn’t proceeding in Australia at all. It was brought in U.S. federal courts in New York and was heard today by the U.S. Supreme Court. The case is Morrison v. National Australia Bank.
If you didn’t think the “trick” in this riddle was very funny, you’re right in more ways than...
March 23, 2010"They won't be so opposed to it once they see what's in it." That's the rationalization House leaders have given skittish Democrats to get them to walk the plank on Obamacare Sunday night.
But one of the first things millions of Americans will "see" is an effective 40 percent tax hike on the over-the-counter medicines - from an antihistamine such as Claritin for allergies, pain relief medicine such as Tylenol or Excedrin, Pedialyte to prevent their kids from becoming dehydrated when they are sick, and even prenatal vitamins if they are expecting another one.
All of these items have two things in common. One is that they are classified as "over the counter" (OTC) medicines and available without a doctor's prescription. The other is that if you pay for any of these items with money in your flexible spending account (FSA) or health savings account (HSA) - and according to this ...
March 15, 2010With the focus this week on health care’s “home stretch” and concerns about government limiting the ability of ordinary Americans to make choices about medical treatment, another threat to freedom is accelerating this week that could harm Americans’ abilities to start a business, invest for retirement, and get affordable home and auto insurance policies. Today, after abruptly shutting down earnest negotiations between Senate Republicans, Senate Banking Committee Chairman Chris Dodd announced a partisan so-called financial regulatory reform bill that he will try to ram through his committee within a week.
Dodd's bill would do nothing to put restrictions on two entities that were proximate causes of the housing bubble, the government-sponsored Fannie Mae and Freddie Mac, and instead would hit Main Street businesses and entrepreneurial firms that had nothing to do with the crisis. The...