Skip to comments.Frank-Dodd fails first test
Posted on 08/04/2010 10:53:06 AM PDT by Graybeard58
"And speaking of Countrywide, how can a bill written by Chris Dodd and Barney Frank possibly solve anything, when they were right in there ... right there with the collapse at every level in the first place? Isn't this a little like asking Mel Gibson to write your company's rules on anger management and racial tolerance?" commentator Glenn Beck, July 22
Corrupt Democratic Sen. Christopher Dodd and Rep. Barney Frank, D-Mass., indeed wrote the financial-industry-overhaul bill that President Obama has signed into law. Among the bill's most grievous errors, it rewarded the worst and most asleep-at-the-switch actors in the collapse of the housing and financial industries the Federal Reserve, the Treasury and the Securities and Exchange Commission with broad new powers that in all likelihood will weaken the financial system and stunt economic growth. And as the enormous cost trickles down, ordinary Americans will pay in any number of ways, including via lower returns on their retirement savings, lost raises and fringe benefits, higher taxes, and pricier goods and services.
Most remarkably, Sen. Dodd and Rep. Frank left the money-hemorrhaging government-sponsored enterprises at the heart of the crises, Fannie Mae and Freddie Mac, and their homownership-is-a-right philosophy to fester, furthering the risk-taking that spawned the Chris Dodd Bear Market and Recession. This was no oversight. Sen. Dodd even threatened to filibuster his own bill if his colleagues tried to amend it to include a comprehensive Fannie/Freddie fix. At stake are the trillions in worthless mortgages that Fannie and Freddie bought, on orders from Housing and Urban Development bureaucrats and Sen. Dodd, Rep. Frank and other members of Congress, for which taxpayers now are on the hook.
Now, where government "reforms" go, unintended consequences must follow, especially when those reforms consume more than 2,000 pages that go largely unread before members vote. It's rare, however, when unintended consequences happen as instantly as they did with Frank-Dodd.
As a favor to the trial lawyers, Sen. Dodd and Rep. Frank set it up so bond-rating firms can be sued if they get their ratings wrong. That can happen in a number of ways, including sponsors overstating assets to or withholding vital financial data from the rating firms. Essentially, Dodd-Frank holds bond houses liable for untold billions when companies deceive them.
So on the first day the new rules went into effect, the firms refused to let their ratings be used, effectively scuttling new bond issues and freezing the $1.4 trillion market in asset-backed securities. To get the markets moving again, unelected SEC bureaucrats essentially overruled Congress. For the next six months, they will allow bond sales without benefit of credit ratings, a rule that poses substantial risk to bond buyers. Come January, however, absent highly unlikely changes to Dodd-Frank, the SEC and the bond houses will be at loggerheads again.
What else did Frank-Dodd get wrong? Plenty, probably, solely because Sen. Dodd and Rep. Frank were tasked with devising a big-government fix for the big-government mess they created.
Ping to a Republican-American Editorial.
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Dodd-Frank’s backdoor stimulus?
Nope. Not touching that one.
Thanks for the Fox writing the rules for the Henhouse ping Graybeard.
If there was any justice in the world, these two criminals would be rotting in jail for the rest of there lives, along with Raines and Gorelick.
And some people still wonder why companies are increasing their cash reserves at this time rather than investing and expanding...it could be a matter of survival - with things like this and the ‘healthcare’ bill...