New national economic plan: Federal Reserve’s power will be hugely increased
CNN reports that Treasury Secretary Paulson is preparing to unveil a plan that would basically do the exact opposite of abolishing the Federal Reserve- the plan will grant the Fed nearly unlimited powers of regulation of oversight.
“One of the most dramatic changes would extend the powers of the Federal Reserve — designed to regulate the commercial banking industry — to oversight of virtually the entire financial industry.”
CNN writes:
“The banking and financial industry regulation structure has been developed over decades, from the establishment of the national bank charter in 1863 to the creation of the Federal Reserve system in 1913 to recent changes made in response to other crises. Now, however the ever-expanding complexities of global markets have largely outgrown some of the structure’s component parts, creating weaknesses and redundancies.
Paulson will propose the Federal Reserve have authority to look at the financial status of any institution that could affect market stability; the Securities and Exchange Commission merge with the Commodity Futures Trading Commission; stock exchanges have more room for self-regulation; and bank supervision be consolidated into one regulator, according to Brookly McLaughlin, another department spokeswoman.”
Don’t look to Congress to scale back these drastic power increases.
“Nearly all of the proposals will require the approval of Congress, where Democrats are already at work on their own proposals. Sen. Charles Schumer, D-New York, said that Democrats “agree with large parts” of Paulson’s plan but think the proposals should go further.”
The Boston Herald elucidates some further points:
- “The proposal would abolish agencies such as the Office of Thrift Supervision and the Commodity Futures Trading Commission, shifting their responsibilities to other federal institutions.”
- “Under the current hodgepodge, institutions that take deposits and are federally insured face multiple regulatory bodies. By contrast, hedge funds, private equity firms and investment banks endure substantially less regulation.”
It frightens me to see that power is being even further consolidated behind the tightly closed doors of the Federal Reserve. Giving near-limitless regulatory power to a group that conducts its business under little or no regulation seems to me to be self-defeating… or self-serving.
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So, Congress abducated its Constitutional authority to regulate currency in 1913 by unconstitutionally transferring that power to a cartel of privately owned banks — the Federal Reserve.
Having devalued US currency to the tune of 95% since that time, Congress will now empower the Fed with broad powers to oversee the entire financial sector.
And so, a particular group of bank owners, executives and advisors comprised of the wealthiest and best connected men in the nation — men who can not be expected to neglect to advance their own financial and political agendas through these new powers — these men will now have the ability to investigate and regulate all actual or would-be competitors in the economic future of the United States of America.
That ought to go well…
It’s common sense to require a home borrower to put up say 20% cash on buying a home, so he’ll have a stake in keeping it - and to require the borrower to have enough income to pay the mtge’s annual cost. The Wall Streeters invented a way to palm off mtge’s to others, so they didn’t care what the borrower could afford - just wanted to get his name on the mtge and then sell it to a sucker. That’s why the lenders are now broke. Without regulation, they’ll do it again.
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