Congress Approves Overreaching Financial Legislation
On Thursday, July 15, 2010, Congress passed a distended financial reform bill, giving the Obama administration enhanced influence over the U.S. financial industry. The 2,300-page financial reform legislation increases federal oversight of the financial industry, regulates the derivatives market and derivative trading, and establishes a federal oversight commission, headed by Treasury Secretary Timothy Geithner, responsible for detecting potential risks to the financial industry. This legislation squeaked through the Senate after the New England Republican trio, Senators Olympia Snowe, Susan Collins, and Scott Brown voted in favor of its passage. The legislation subjects the nation’s financial industry to the whims of the Obama administration and liberal leaders. It shuns free-market capitalism and mirrors European social democracy.
The creation of a council of federal regulators, who are responsible for overseeing the entire financial industry, is gravely disconcerting. The council of federal regulators will be comprised of government officials and politicians, not business leaders or economists. The commission will be led by Secretary Geithner, with assistance from the chairman of both the House and Senate banking committees. Binyamin Applebaum and David Herzenhorn, in their article “Financial Overhaul Signals Shift on Deregulation,” note that the newly-established commission will be responsible for coordinating the detection of risks to the financial system and dismantling troubled companies. But the federal government is not supposed to have the authority to dismantle corporations. From the myriad of public pronouncements made by President Obama, Secretary Geithner, Senator Christopher Dodd, and Representative Barney Frank, it appears that this provision exceeds the powers that the Constitution grants the federal government.
Aside from establishing a government-controlled regulatory commission, the legislation also creates the position of a financial regulator, who is responsible for protecting consumers from shoddy investment advice. The legislation states that the President of the United States is responsible for appointing someone to fill the position of “financial regulator.” This provision is problematic because it does not force the president to nominate a candidate with the credentials necessary to serve in this capacity. Rather than selecting an economist or business leader, it is likely that President Obama will appoint a government bureaucrat who believes as he does that the government, not the private sector, should be in command of the financial system.
Since the onset of the current economic recession, politicians from both parties have worked to bolster federal control over the economy and the financial sector. The American economy, once the greatest engine of growth and productivity in the free world, is under attack. In addition to being mired in the most calamitous economic predicament since the Great Depression, America’s free-market system is under direct assault. Since 2008, the federal government has repeatedly approved legislation that erodes the authority of private businesses and shuns free-market capitalism. Through the passage of TARP, the auto bailout, the financial bailout of 2008, and the financial regulation legislation, the federal government has been eroding free-market capitalism piece by piece. Even corporations such as General Motors, AIG, and Chrysler are no longer dependent upon their stockholders for selecting company leadership, as that authority has now been bestowed upon the President of the United States. It is appalling to think that in the United States of America, the freest nation on the planet, the President of the United States is directly in control of the day-to-day operations of American corporations. The passage of this financial regulation legislation enhances the federal government’s authority over the nation’s financial industry.
Senator Richard Shelby (R-AL), the ranking member on the Senate Budget Committee, when asked about his opinion about this legislation, stated, “It creates vast new bureaucracies with little accountability and seriously, I believe, undermines the competitiveness of the American economy.” Senator Shelby’s eloquent words highlight the legislation’s greatest fault: the demise of competition. The financial reform legislation, coupled with the panoply of legislative monstrosities approved by Congress in the past year-and-a-half, are destroying our coveted and cherished free enterprise system. Now, more than ever, it is hypercritical to rebuke the liberal domestic policy agenda and fight vociferously for conservative, free-market policies. So long as liberals remain in control of the White House and Congress, the American economy and free-market capitalism will remain in a volatile predicament.
The National Section of the Weekly Political Forecast is authored by PAI’s Political Analyst.
