A landmark election result came out of Massachusetts on Tuesday and the White House doesn’t see the forest or the trees. In a stunning reaction to the election, the President attacks banks in an effort to limit their size and the amount of risk they can take on.
One of his suggestions are to place a dividing wall between investment and consumer banks. This move won’t protect the financial system at all. AIG is a “non-bank” and was one of the major institutions the feds thought was “too big to fail”. In addition, the dividing line will remove some flexibility within those businesses to react to bad situations. Some analysts believe that banks could lose 20-50% of their profits if this goes in and that they will no longer be competitive in the international financial industry.
What’s even more disconcerting is that Obama didn’t hear the cry of the average American. While many are easy to pile their anger on to the banks, the real things voters want: fix the jobs situation, make us secure.
This new attack on banks comes oddly on the same day that disappointing first-time employment numbers and unexpectedly terrible manufacturing sector figures were released. The media is transfixed on Obama leading a cavalry charge to disembowel mean bankers, but no one is paying attention to the fact that the recovery isn’t actually happening or that the job situation is not improving – after the egregious amount of printed money he spent.
If limiting the size of financial institutions is really the fix we need, why are Fannie Mae and Freddie Mac mysteriously missing? Why is the President still pressing to consolidate all consumer student loans under one government entity? Why is leaving all that risk under fewer roofs good? Somehow the government is better at managing risk than the private sector?
If more regulation and government oversight fixes everything, then explain why Fannie Mae had to beg for another $15 billion in November and recorded an almost $19 billion loss for just the third quarter?
This smoke and mirrors approach to concealing the fact that government oversight and regulation failed even worse than the private banks – and none of this will do anything to fix unemployment or the economy.