Finance Power Play: Obama's "Finance Reform Bill" Will Certainly Have a Great Effect on the United States, but It Probably Won't Be a Beneficial Effect

By Scaliger, Charles | The New American, August 30, 2010 | Go to article overview

Finance Power Play: Obama's "Finance Reform Bill" Will Certainly Have a Great Effect on the United States, but It Probably Won't Be a Beneficial Effect


Scaliger, Charles, The New American


On Wednesday, July 21, President Obama triumphantly signed the latest plank in his bid to outdo Franklin Delano Roosevelt's Depression-era radical expansion of federal government powers. While Obama's overall program has yet to challenge the New Deal as the greatest federal power grab in U.S. history, the Dodd-Frank Wall Street Reform and Consumer Protection Act is certainly the most massive imposition of federal power ever inflicted on the financial sector. In the sobering phraseology of Investor's Business Daily's Ernest S. Christian and Gary A. Robbins, "under Dodd-Frank, [Obama] and his agents will control all credit and financial transactions, rewarding friends and punishing opponents, discriminating on the basis of race, gender and political affiliation. Credit and liquidity may be choked by bureaucracy and politics--and the economy will suffer."

[ILLUSTRATION OMITTED]

Harsh words, seemingly, but not exaggerated a whit. The new bill is a staggering 2,300 pages long, and has nearly the word count of the King James Bible. No lawmaker who voted for the document--much less the President who signed it into law--has read the bill in its entirety. As with every bill of this kind, no one yet knows what nasty legal surprises are concealed in deliberately ambiguous phrases and artfully tucked away in myriad subsections that failed to attract the full scrutiny of lawmakers. And no one can possibly predict what new regulations--doubtless numbering in the tens of thousands of new pages of federal law--will emanate from the bureaucracies set up by Dodd-Frank. But there can be no doubt that President Obama's finance reform bill will, as advertised, permanently reconfigure the American financial landscape, albeit not in ways many of its supporters envision.

Possibly the most burdensome feature of the new federal financial regulatory regime is the Bureau of Consumer Financial Protection, whose mission will be to regulate virtually every type of financial activity, ostensibly to protect American consumers from so-called "predatory lending practices" and other forms of fraud.

Bureaus and Offices

Created by Title X of Dodd-Frank, known as the "Consumer Financial Protection Act of 2010" (CFPA), the Bureau will be empowered to regulate all companies involved in consumer lending and their products and services, including, but not limited to, credit cards, mortgages, debit cards, consumer loans, payment systems, and bank accounts. The Bureau of Consumer Financial Protection will crack down on all forms of loan products where widespread abuses are supposedly being perpetrated, like credit cards, auto loans, overdraft loans, and student loans. Such "abuses" include excessive fees, interest, discriminatory profiling of loan applicants, and harsh approaches to debt collection. All of these practices, and much more, the federal government will now have almost unlimited authority to supervise.

Described (by the liberal think tank Americans for Fairness in Lending, hardly an unbiased source) as "an agency completely dedicated to protecting consumers from dangerous financial products," the Bureau of Consumer Financial Protection will be divided into five sections, namely, Research, Community Affairs, Complaint Tracking and Collection, the Office of Fair Lending and Equal Opportunity (to ensure equitable access to credit), and the Office of Financial Literacy (intended to promote financial literacy among consumers). In other words, this ponderous new bureaucracy will not merely regulate financial activity, but will actively seek to "educate" (read: propagandize) consumers on the subject of finance--finance, that is, as the government perceives it.

This new regulatory bureaucracy-cum-financial propaganda ministry will, by design, be part of the Federal Reserve, the same organization that has been subject to withering (and, one hoped) revealing scrutiny only months ago, in view of its complicity in the financial meltdown and resulting worldwide recession (as well as many recessions and depressions prior to this one). …

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