DodgerKing
January 21st, 2010, 09:19 PM
Turds in the Punchbowl Deregulation (http://www.rightnation.us/forums/index.php?autocom=blog&blogid=7&showentry=4235)
Posted by Mr. Naron (http://www.rightnation.us/forums/index.php?showuser=4807), Jan 21 2010, 11:24 AM
Obama's moving on now that health care reform is all but dead. Today, he said "Never again will the American taxpayer be held hostage by a bank that is too big to fail" as he announced new banking restrictions (http://money.cnn.com/news/newsfeeds/articles/djf500/201001211300DOWJONESDJONLINE000591_FORTUNE5.htm). And it should come as no surprise that he's moving on to this issue because it will resonate with the same voters who he's been losing on the health care issue. Whine as we might, conservatives are going to get our butts handed to us on this unless we get the heart of the matter and get to it quickly.
The truth is that too many banks have sold out to what I call "Two Cs Capitalism" --credit capitalism and crony capitalism. They've played within absurdly unrealistic limits while pretending that because it was all perfectly legal, there would be no negative consequences. The Federal Reserve on one hand has created an illusion of expertise that has made credit capitalism, where banks and investors feel perfectly confident to ride the wave of inflation, flourish while on the other hand, elected officials in Washington encouraged banks to take incredible risks by putting the American taxpayer on the hook for it all.
If there's something wrong with that analysis, I'd like to hear it.
Okay, so what do Republicans do about it?
http://www.siskiyous.edu/class/guid1/GUID%205/Lectures/turd_in_punchbowl.jpg
First, let me say that I could care less if the GOP succeeds as a party. But with what appears to be a shift from business as usual party insiders to Tea Party activists, I think there's hope that better, more effective solutions and messages might come out of the GOP this year. So I'm optimistic that the GOP can turn Obama's populist ranting about the banks on its ear. And here's how they should do it.
Forget the bonuses and the taxes on banks that received TARP money. I know that there were banks that had no choice. I know that it's unconstitutional to do what Obama is proposing. But as an industry, banking brought this on itself. Innocent people will suffer as they always do when the constitution is violated in the name of helping "the people".
What GOP candidates and surrogates need to do is go Obama one further in populist rhetoric by highlighting the bi-partisan creation of a moral hazard in banking. They need to go all the way back to the Depository Institutions Deregulation and Monetary Control Act of 1980 (http://www.fdic.gov/bank/Historical/s&l/slbib4.html) when Congress authorized a savings and loan deposit insurance limit increase from $40,000 to $100,000. It needs to be shouted from the roof tops that the Democrats added this increase to a supposed deregulation bill WITHOUT DEBATE. It was an inexplicable backroom deal. It was a turd in the punchbowl. When President Reagan rightly moved to deregulate the S&Ls several years later, the turd floats to the top and costs the American taxpayer over $160 billion.
Flash forward to 1999, President Clinton and a GOP led Congress wisely repeal the New Deal era Glass-Steagall Banking Act, but include a very complicated turd in the punchbowl called "credit default swaps". Along with existing federal deposit insurance, credit default swaps create a nearly risk free atmosphere.
And that's where crony capitalism comes in. The banks themselves weren't too big to fail, the leaders of the industry were too big to fail because they were friends with elected leaders.
The GOP has to pull a Domino's Pizza (they're admitting that their pizza sucks) and expose their own ties to big banks and how those ties led to the bail outs. Then they need to point out the turds in the punchbowl so people can see what they've been drinking.
Then, they need to announce plans to either drastically reduce or eliminate all deposit insurance except for regular checking and savings accounts while denouncing TARP. I know it's a death sentence for a candidate who supported TARP to admit they made a mistake, so some of them need to hit the road. Others had better hope their constituents have other reasons to vote for them. New candidates running against incumbent Democrats HAVE to steal this issue away from Obama. And it has to be a party-wide theme. The GOP has to become the party of untainted capitalism.
No more turds in the punchbowl. Stop letting the progressives set booby traps that blow up in our faces every time we try to take off their economic handcuffs.
Expose the tricks, and you'll win.
My Mind is Clean
Posted by Mr. Naron (http://www.rightnation.us/forums/index.php?showuser=4807), Jan 21 2010, 11:24 AM
Obama's moving on now that health care reform is all but dead. Today, he said "Never again will the American taxpayer be held hostage by a bank that is too big to fail" as he announced new banking restrictions (http://money.cnn.com/news/newsfeeds/articles/djf500/201001211300DOWJONESDJONLINE000591_FORTUNE5.htm). And it should come as no surprise that he's moving on to this issue because it will resonate with the same voters who he's been losing on the health care issue. Whine as we might, conservatives are going to get our butts handed to us on this unless we get the heart of the matter and get to it quickly.
The truth is that too many banks have sold out to what I call "Two Cs Capitalism" --credit capitalism and crony capitalism. They've played within absurdly unrealistic limits while pretending that because it was all perfectly legal, there would be no negative consequences. The Federal Reserve on one hand has created an illusion of expertise that has made credit capitalism, where banks and investors feel perfectly confident to ride the wave of inflation, flourish while on the other hand, elected officials in Washington encouraged banks to take incredible risks by putting the American taxpayer on the hook for it all.
If there's something wrong with that analysis, I'd like to hear it.
Okay, so what do Republicans do about it?
http://www.siskiyous.edu/class/guid1/GUID%205/Lectures/turd_in_punchbowl.jpg
First, let me say that I could care less if the GOP succeeds as a party. But with what appears to be a shift from business as usual party insiders to Tea Party activists, I think there's hope that better, more effective solutions and messages might come out of the GOP this year. So I'm optimistic that the GOP can turn Obama's populist ranting about the banks on its ear. And here's how they should do it.
Forget the bonuses and the taxes on banks that received TARP money. I know that there were banks that had no choice. I know that it's unconstitutional to do what Obama is proposing. But as an industry, banking brought this on itself. Innocent people will suffer as they always do when the constitution is violated in the name of helping "the people".
What GOP candidates and surrogates need to do is go Obama one further in populist rhetoric by highlighting the bi-partisan creation of a moral hazard in banking. They need to go all the way back to the Depository Institutions Deregulation and Monetary Control Act of 1980 (http://www.fdic.gov/bank/Historical/s&l/slbib4.html) when Congress authorized a savings and loan deposit insurance limit increase from $40,000 to $100,000. It needs to be shouted from the roof tops that the Democrats added this increase to a supposed deregulation bill WITHOUT DEBATE. It was an inexplicable backroom deal. It was a turd in the punchbowl. When President Reagan rightly moved to deregulate the S&Ls several years later, the turd floats to the top and costs the American taxpayer over $160 billion.
Flash forward to 1999, President Clinton and a GOP led Congress wisely repeal the New Deal era Glass-Steagall Banking Act, but include a very complicated turd in the punchbowl called "credit default swaps". Along with existing federal deposit insurance, credit default swaps create a nearly risk free atmosphere.
And that's where crony capitalism comes in. The banks themselves weren't too big to fail, the leaders of the industry were too big to fail because they were friends with elected leaders.
The GOP has to pull a Domino's Pizza (they're admitting that their pizza sucks) and expose their own ties to big banks and how those ties led to the bail outs. Then they need to point out the turds in the punchbowl so people can see what they've been drinking.
Then, they need to announce plans to either drastically reduce or eliminate all deposit insurance except for regular checking and savings accounts while denouncing TARP. I know it's a death sentence for a candidate who supported TARP to admit they made a mistake, so some of them need to hit the road. Others had better hope their constituents have other reasons to vote for them. New candidates running against incumbent Democrats HAVE to steal this issue away from Obama. And it has to be a party-wide theme. The GOP has to become the party of untainted capitalism.
No more turds in the punchbowl. Stop letting the progressives set booby traps that blow up in our faces every time we try to take off their economic handcuffs.
Expose the tricks, and you'll win.
My Mind is Clean