Divided They Fall – Right-Wing Regulation

Does it seem to you that the present government is splintering apart? There are divisions between the White House and Congress; between the House and the Senate; within the House and the Senate, and within the White House itself.

And then there are The Media….

While most of the mainstream media, aka “fake news” in alt-right eyes, are focusing on how inept Congress and the President are, the fact is that both of these arms of government are moving quite quickly forwards, but toward opposing goals.

For example, this summer the House passed the Financial Choice Act by a vote of 233 to 186 along party lines.

The Financial Choice Act (FCA) seeks to overturn the 2010 Dodd-Frank Act regulations that sought to reign in big banks and other large corporations making over $50 million which invested their own and their clients’ money into risky investments. The FCA also seeks to gut a number of federal regulatory agencies, bureaus, and commissions charged with protecting all Americans.

The FCA grants powers to the President and Congress to eliminate the Consumer Financial Protection Bureau that Senator Elizabeth Warren worked so hard to bring into being but, like Moses, was forced to watch her dream be carried on by someone else.

The FCA would give President Trump the power to fire the heads of both the Consumer Financial Protection Bureau and The Federal Housing Finance Agency. The FCA also allows Congress to completely strip funding for the Consumer Financial Protection Bureau.

The FCA even bars the FDIC from overseeing the “living will” program that requires big banks to have a plan to unwind after another major disaster like the Great Recession.

You may recall that the FDIC oversaw the failures of 465 banks in the US between 2008 and 2012, while the Fed’s balance sheet skyrocketed up to $4.5 trillion in 2009 as it took on failing corporations’ debt.

Because of the Great Recession, the entire financial sector that used to issue certificates of deposit that paid high rates of interest to bank customers has pretty much died, as has the Treasury bills market that used to provide funds for seniors on Social Security and younger savers.

Half-Baked Acts

Most troubling of all, the FCA has given power to Congress to eradicate the Volker rule. This is the rule that limited banks from investing more than three percent of their funds in private equity or hedge funds. The Volker rule also curtailed bank’s use of their own money for proprietary trading, a profitable but extremely risky practice if they made bad bets.

The Financial Choice Act is now sitting in the Senate, awaiting the same fate at the Affordable Care Act (ACA). The FCA was not a result of bi-partisan cooperation. There’s  talk of working out a reconciliation with House and Senate, but opponents are fighting the Act tooth and nail.

Like the ACA (“Obamacare”), the Dodd-Frank Act from the Obama era was merely a first step in what needed to be a larger configuration for best results.

At Republican Party insistence, the ACA did not cover every American with health care protections. Nor did it (nor does Medicare for that matter) allow our government to negotiate lower drug prices as all the other developed countries governments do on behalf of their citizens.

The Dodd-Frank Act, while mandating stress tests each year and limiting big banks’ use of our deposits, did not cover a whole host of new lenders called “shadow banks”. The financial health of these large lenders is a risky as their name suggests.

These lenders sell car loans, student loans, and mortgage loans. This sector is virtually un-regulated and, even back before 2008 was closely allied with the big banks and other too-big-to-fail corporations.

Do any of us need to be reminded what happened to the housing market because of loose lending by banks and securitization of mortgage-backed loans prior to the Great Recession?

Anyone who dreams that the “free market” can really be free to competitively create the lowest possible fair price for goods and services in an economy that has been fattened up by political money-lending that enables oligopoly-rule by a few giant conglomerate corporations in each sector of that economy is surely dreaming.

Regulatory Schizophrenia

While Congress is busy trying rolling back regulations created by President Obama, so has President Trump with his use of executive orders and tweets.

President Trump has also managed to use his ferocious talents at firing people to decimate a number of other agencies besides those Congress is bent on eliminating.

That’s why a new scheme proposed by White House advisor Steve Bannon this week seems on the surface quite contrary to the White House’ and Congress’ mission to destroy as many regulations for corporations as they can.

While Congress plans on lifting regulations on giant banks and letting them run wild again with clients’ bank deposits, Steve Bannon wants to use our tax money to regulate giant tech companies, like Facebook and Google, as quasi-governmental entities that we call “public utilities”.

Yes, just like water, gas & electric, and sewage companies, Facebook, Google and others, would come under government control through regulation. As public utilities government could regulate prices charged by tech companies (a rather novel idea for companies that currently serve most of us for free), but not have complete control over their day-to-day operations.

Even while Bannon is suggesting such a “socialistic” regulation, President Trump’s Federal Communications Commission (FCC) Chair, Ajit Pai, is attempting to roll back the net neutrality rules that President Obama’s administration tried to preserve by reclassifying Internet Service Providers as public utilities.

What are we to make of a government whose right hand doesn’t know what its “alt right” hand is doing?

p.s. Note that with the alleged death of Trumpcare this week, the House is now promising us tax cuts, but what the House did this past week (busy bee that it is) was approve a $658 billion spending bill that includes $1.6 billion for building the border wall between the US and Mexico.

This bill passed 235 to 192 along party lines.

 

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