White House Blog: Watch Out for Loopholes in Financial Reform Bill
Dan Pfeiffer, the White House Communications Director, posted on the White House Blog, “The 10 Most Wanted Lobbyist Loopholes”. Mr. Pfeiffer is basically telling us that lobbyists are working to weaken Obama’s “Wall Street Reform” by limiting provisions in the bill. Some of his concerns are things that we should genuinely look into, but others are just fear-mongering 101.
First, he says that the lobbyists will ask that only the Federal government be involved in enforcing the reforms. Pfeiffer writes that, “..the Bureau would only supervise larger market participants. Without state AG enforcement authority, the citizens of their states will have much less protection against illegal conduct. If you want to weaken consumer protections, that’s one way to do it.”. But wait, I thought this was Wall Street Reform, to prevent the “too big to fail” problem from re-occurring. Why does this bill need to choke small or medium lenders (your hometown bank or auto dealer) if those had nothing to do with the catastrophic failures Obama says this bill will prevent?
Next, Dan argues that the lobbyists will push to let non-banks have different regulations than banks by pointing out that, “..if a car dealer makes loans, or if a big department store sets up a financial services center, it’s doing what banks and credit unions do, and it should play by the same rules.”. This point is poorly made. He’s saying a department store and a bank are the same, but neither one of these institutions is supposed to be the major focus of the reform, remember.. too big to fail.
The post also talks about only letting firms make loans where they have “skin in the game”. These provisions would be pointed at banks that make loans to folks that do not have the ability to pay. Hopefully this would also prevent the government from forcing banks to make such loans that they would immediately want to sell off on to someone like, I don’t know.. Fannie Mae? The author says that lobbyists would try to remove these provisions so that they could make these loans. Banks don’t want these things and I can’t imagine them lobbying for them. If any lobbyists were going to be pressing for these changes it will be whatever corrupted Phoenix arises out of the ashes of ACORN.
Some points in Mr. Pfeiffer’s post are things to watch for, but some wreak of an over-reaching central government. He’s trashing the financial industry lobbyists but where is the discussion on special interest groups and key political power-mongers that will be pressing to make sure that Fannie Mae and Freddie Mac are allowed to continue operating as they did in the crisis? Where is the outcry on the Congressionally-backed groups that also caused the meltdown? This is an intellectually dishonest attempt to embarrass opponents of the legislation into giving in to the desires of the administration. This is a poor attempt to create populist support for a massive government over-reach into the bowels of banking in America, and not just the big banks.