Barney Frank Just Ripped You Off

I just finished reading Brian Sullivan’s Reform battles rollback as Romney pledges to repeal Obama's financial regulations regarding the differences between Romney and Obama on the financial services regulations known as Dodd-Frank and Sarbanes-Oxley. Sullivan’s piece is mostly what you would expect from a mainstream media outlet.

It’s a topical check list of “On the one hand Romney wants, on the other hand Obama says…” that is just a series of campaign infomercials disguised as balanced analysis.

(Please see my personal plea at the end of this article for USA Cares this Memorial Day- and please... give generously)

And it illustrates what’s really wrong with the battle over policy issues today, especially in Washington.

Because what’s more important than the “he said, she said” narrative that tries to balance campaign talking points, is the question: Does legislation that comes out of Congress work as it was supposed to work? It seems to be a question singularly lacking when proposing legislation in Washington, D.C.

That’s because unfortunately, the answer to the question is often- maybe even usually- “no.” And the bigger the piece of legislation, the more divorced it becomes from delivering results.

Obamacare won’t lower costs; No Child Left Behind won’t makes schools better; Cap and Trade won’t give you “the moment when the rise of the oceans began to slow and our planet began to heal;” and Dodd-Frank hasn’t made our financial system any sounder than it was before.

In fact, Dodd-Frank has actually made the process worse, like the other examples I cited above.

That’s because guys like Barney Frank and Chris Dodd are more interested in wielding a lead pipe when it comes to legislation than they are in actually solving problems. The lead pipe is very useful when it comes to raising money.

Let’s take Sarbanes-Oxley. I pick it because Sarbanes-Oxley shows that this is a bi-partisan problem.

Passed with bi-partisan support and signed by Republican president George W. Bush, it was meant originally to address accounting and corporate scandals that killed companies like Enron and WorldCom. But the legislation missed the mark by a wide area.

The legislation required, for example, principal officers of a company to be personally liable for the veracity of corporate accounting even though, you know, it’s impossible for one individual to vouch for the veracity of anything as big as every line item for a publicly-traded company. The result is that fewer people want to serve as officers of publicly-traded companies, and so we have fewer publicly-traded companies. The cost of compliance, especially for smaller companies that need capital, is high.

Ask the CEO of Facebook or any other publicly-traded company if they can vouch for the veracity of their financials today better than they could have without the assistance of Sarbanes-Oxley.

Do you really think that Mark Zuckerberg knows for a fact that there are no material misstatements in his own financials?

If he is honest he would say that he can not verify his own financials with 100 percent certainty.

And the shame of it is that the principals in companies like WorldCom and Enron were punished under laws that already existed. In the case of Ken Lay at Enron, he was convicted of ten counts and would have gone to jail for 20-30 years had he not died of a heart attack before sentencing. Bernie Ebbers of WorldComn was convicted and got 25 years. And as the Bernie Madoff Ponzi scheme scandal proved several years later, there is no law that prevents someone from breaking the law.

The law does many things, but what it is supposed to do primarily is protect taxpayers from having to fund another TARP-style bailout of the financial system.

As Peter Walliston in the Wall Street Journal notes, Dodd-Frank now allows some banks and financial service firms to take more risk on the backs of taxpayer guarantees that operate under the Dodd-Frank reforms.

So in other words, the government solved the problem of the government guaranteeing the financial services industry- which they were never legally obligated to do- by… passing legislation that now requires the government legally to guarantee the financial services industry. Of course firms are eager to gain those guarantees from obliging government officials because it makes them more competitive than their rivals. And that means lobbyist.

This is not speculation. The banking industry is already made up of a host of smaller banks and a few huge banks that are widely considered too big to fail—and the biggest banks have a lower cost of funds than their small competitors [thanks to government guarantees], as Thomas Hoenig (then of the Kansas City Federal Reserve Bank, now of the Federal Deposit Insurance Corporation) and others have shown. Fannie Mae and Freddie Mac, thanks to their government backing, also had advantageous funding, so much so that they drove even the biggest banks from much of mortgage market.

So what Dodd-Frank has really done is institutionalize the risk across the entire financial system, and then put government guarantees up for sale to the highest bidders on Wall Street. The taxpayers are still on the hook for the systemic risk in our financial system, perhaps now even more than ever.

Now ask yourself: What company isn’t going to lobby the government to guarantee them against failure? How much would it be worth in campaign contributions to keep your federal banking guarantee?

Ok, so now you know why Wall Street is the biggest contributor to political campaigns. You also know what Wall Street received in return for the record number of dollars they donated to Obama in 2008. The quicker we separate the two, the better we will all be.

Because this is what happens when you combine election politics with big-time finance, two industries that are dedicated to winning no matter what the cost.

This Memorial Day weekend there will be thousands of parades, picnics and remembrance events for those who died fighting for the United States.

There will also be sales and bargains for those that choose to spend the holiday traveling or shopping.

Like all holidays, Memorial Day is sometimes at risk of losing its meaning in our commercial society, as shoppers and travelers forget about the sacrifices all of our troops and their families make.

So here’s a gentle reminder while we all enjoy time off from work and get our fill of backyard barbeques.

As you read this hundreds and thousands of men and women in uniform and millions of family members sacrifice comfort, treasure and freedoms so that the rest of us can be free. While we enjoy picnics, they are at war.

And our service members make sacrifices not just for Americans but also for people around the world, most of whom will never appreciate what they have done for them.

Service members like Petty Officers Peter Cully and Matthew Plungis, shipmates I know, go on deployment, come home, find a job, only to go on deployment again.

Families like the Schaffer family in Colorado Springs endure deployments every year it seems.

Children grow up, raised mostly by mommy or daddy or grandma, while one or both parents fight a war.

Given the strain we put on our service members, it’s not surprising that some of those who serve in the military come back home only to face desperate financial need.

This weekend, then, it is only fitting that we recognize those who have made the ultimate sacrifice protecting our freedoms. But we should also remember to help those living soldiers, sailors and airmen who continue tosacrifice to protect our freedoms.

USA Cares is a nonprofit 501(c)3 organization that helps post-9/11 military families bear the burdens of service with financial and advocacy support. Its mission is to help with basic needs during financial crisis, to assist combat injured Veterans and their families and to prevent private military home foreclosures and evictions.

Thanks to USA Cares, corporations have discovered that recognizing the courage and sacrifice of America’s military is actually good for business. USA Cares helps businesses understand that putting on a wristband, waving the flag, or hanging a “support our troops” sign in the window can help boost sales for sure.

But without true service to those who “serve us,” a commercial approach can backfire.

USA Cares shows companies how to support a developing trend that ought to be encouraged amongst more companies.

When companies partner with USA Cares, they know that they are making a positive difference.

• Hardees and Carl’s Jr. recently announced a partnership with USA Cares and Homes for Our Troops. To participate, restaurant guests donate $1 in support of both of these military charities. For each $1 donation, guests receive a commemorative “Stars for Troops” cut out to personalize and place on display in the restaurant; in addition, they receive restaurant coupons valued at more than $10 to use toward future purchases.

• Batteries Plus has partnered with the nonprofit USA Cares and its Jobs for Vets Program by launching the “Time to Care” campaign. The company is donating $5 of each regular and lifetime watch battery replacement to USA Cares over the Memorial Day holiday and will accept in-kind donations from customers at its retail locations. They are also contributing $1 for every person who “likes” the Batteries Plus Facebook page and “supports” the USA Cares Jobs for Vets Cause page.

• Upscale retailer Brighton Collectables has designed a yellow ribbon charm to support the troops. With every $25 charm purchase, $20 is directly donated to USA Cares. Over the past three years, Brighton Collectables has supported USACares with over $200,000 from the sale of their “peace” bracelets.

Memorial Day is a great time to celebrate our freedoms and the invaluable contributions made by our Armed Forces.

Remembering the sacrifices of our soldiers and their families is a great way for all of us to say “Thanks” to the troops.

Supporting those businesses that help our troops through USACares is a great thing to do not only on Memorial Day but all year long.

Plus, it gives everyone someone to remember on Memorial Day. Millions of someones in fact.

I work in the banking sector for one of this country's largest (still domestically owned) banks.

Let me tell you what our bank's Senior Management has already told us after working with the regulators recently and that is this: If you thought the damange from the 2008 market crash driven by the Lehman Brothers collapse in 2008 was bad, wait until the Dodd-Frank regulations are finally "interpreted" by the Fed's and passed down to the banks.

The credit freeze that happened after Lehman Brothers will pale by comparison to what Dodd-Frank is going to do to small to medium sized business lending.

Want to know why Bank's aren't lending as much as they used to? Blame the regulators. When the Banking Regulators come in for an examination, one of the things they examine is our loan portfolio. They review each loan for risk and force the Bank to take action based on their findings.

Here's where the problem starts: Regulator A will review the loan profile and see nothing risky, close the audit and leave. Regulator B comes in 6 months after Regulator A left, reviews the same loan profile and magically "discovers" some unseen risk in the Bank's loan profile, and then requires the Bank to increase it's capital reserves to cover the magically discovered risk, which then reduces the amount of money the bank has to loan out.

Forget the fact that Regulator A passed the loan profile with no to low risk, Regulator B "has to find something" to justify their existence.

This is happening ALL OVER THE COUNTRY, the ones most hurt are the small to medium sized banks and community banks. I've lost count of the number of friends I have in I.T., Risk Management and Loan Operations here locally that have told me the same thing.

Dodd-Frank is going to make this problem INFINITELY WORSE as the new regulations are interpreted, re-interpreted, challenged, etc.. Dodd-Frank if it goes into effect is literally going to "lock up and freeze" lending in this country, no matter how good one's credit score is for the retail borrower, or small to medium sized business owner.

In short, Dodd-Frank is an economic GROWTH KILLER.

(We've had three visits by the regulators in the last three years BTW. They're on-site for 4-6 months each time. Talk about an exhausting examination, they make the TSA seem efficient by comparison.)

The fact of the matter is that TARP made "too big to fail" worse.

Prior to TARP, the top five banks in this country held roughly 38-40% of all retail banking deposits. (That is checking, savings, CD's, etc..) As of last month, the top five banks in this country now hold 52% of all retail banking deposits.

See the problem?

Consumers ran in droves to the "too big to fail" banks after the Lehmah Brothers collapse thinking the Government would always "bail them out" thereby protecting their savings.

The problem with that thinking is those same customers deposit money AND TAX DOLLARS arebeing used to prop up bad assets at these banks, further propagating the problem.

This situation will only correct itself once banking consumers move their accounts to smaller, community based banks in droves, to even start chipping away at "too big to fail."

Those who say the Banks control this country do in fact have alot of merit in their argument, despite the often times stupid rhetoric.

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During the House Financial Services Full Committee Hearing on "Recent Events in the Credit and Mortgage Markets and Possible Implications for U.S. Consumers and the Global Economy", Chairman Barney Frank left the hearing in order to attend a meeting in support of legislation that would force American employers to hire homosexuals. That says a lot about Barney's priorities.

Barney "Fife" Frank.

Financial Services Watchdog

This watchdog only has one tooth.

Barney's boyfriend makes him keep it in his pocket

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How Dysfunctional. Distract everyone else from your foibles ( Fanny-Freddie, CRDA etc ) by enacting control freak legislation that covers systemic risk rather than Moral Hazard, of which you were the main perpetrator, I am not sure what is worse here, the "crime" or the "coverup"...I am afraid America can't rap their heads around the following, it is too complex

* Sarbane's Oxley needs repeal, it drove Corporations off shore for one.
* Dodd Frank needs repeal for all you sighted.
* Reinstate Glass-Stegall with maybe allowing small banks being one stop shops, i.e. mutual funds etc available, it was a good thing until the banks got concerned about the liability post Enron etc.
* Maybe repeal the last Clinton Financial Reform Bill in 99' that had a lot of land mines in it, If my memory is correct Sen Grassley was against this and the repeal of Glass-Stegall.
* A clean sheet approach bill maybe based on Australia's reform(s) to their Financial System that Clinton said no too....

I look forward to your Feedback UsConservative..

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