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View Full Version : Economics Obama unveils plan to communize financial sector; kill the golden goose


Taco John
03-26-2009, 11:19 AM
Administration proposes financial system overhaul, will impose tougher rules on big players

Martin Crutsinger, AP Economics Writer
Thursday March 26, 2009, 11:46 am EDT

WASHINGTON (AP) -- The Obama administration on Thursday unveiled a sweeping overhaul of the financial system designed to impose greater regulation on major players like hedge funds.

Treasury Secretary Timothy Geithner told lawmakers that the changes are needed to fix the flaws exposed by the current financial crisis, the worst to hit the country in seven decades.

The goal is to repair a system that has proven "too unstable and fragile," he said.

"Over the past 18 months, we have faced the most severe global financial crisis in generations," Geithner said in testimony to the House Financial Services Committee. "To address this will require comprehensive reform. Not modest repairs at the margin, but new rules of the game."

The administration's proposal, which will require congressional approval, would represent a major expansion of federal authority over the financial system. It would impose tougher standards on financial institutions judged to be so big that their failure would represent a risk to the entire system.

It also would extend federal regulations for the first time to all trading in financial derivatives, exotic financial instruments such as credit default swaps that were blamed for much of the damage in the meltdown.

The administration also wants larger hedge funds to be required to register with the Securities and Exchange Commission.

In addition, the administration proposed the creation of a systemic risk regulator to monitor the biggest institutions. Geithner did not designate where such authority should reside, but the administration is expected to support awarding this power to the Federal Reserve.

The plan also includes a measure that Geithner and Fed Chairman Ben Bernanke discussed before the committee on Tuesday to give the administration expanded powers to take over major nonbank financial institutions, such as insurance companies and hedge funds that were teetering on the brink of collapse.

That power was aimed at preventing a repeat of the problems surrounding insurance giant American International Group Inc., which sparked a furor last week when it was revealed the company had distributed $165 million in bonuses to employees of its financial products group. The unit specialized in trading credit default swaps, the instruments that drove the company to near-collapse last fall.

"Let me be clear," Geithner told the committee. "The days when a major insurance company could bet the house on credit default swaps with no one watching and no credible backing to protect the company or taxpayers must end."

The administration, pushing for quick action on its reform agenda, sent Congress a 61-page bill dealing with the expanded powers to seize control of nonbank institutions late Wednesday.

The House committee, chaired by Rep. Barney Frank, D-Mass., has indicated it could move on the measure as early as next week.

Frank said the overhaul should ensure the government has more options and can avoid repeating the unattractive choices it faced last fall of letting Lehman Brothers fail, which sent a shock wave to the entire financial system, and propping up AIG with billions of dollars.

"We are looking for an alternative method to avoid those polar extremes," he said.

While many Democratic lawmakers expressed support for Geithner's proposals, Republicans questioned whether the overhaul would give federal regulators too much power.

Geithner on Thursday provided only a broad outline of the other proposals. Many thorny details will need to be worked out.

Administration officials promised that the remaining issues would be hammered out in consultation with Congress with the goal of getting legislation approved as quickly as possible.

The administration wants hedge funds and other private pools of capital, including private equity funds and venture capital funds, to be required to register with the SEC if their assets exceed a certain size. The threshold amount has yet to be determined.

The proposal on credit default swaps and other derivatives would require the markets on which they are traded to be regulated for the first time, and for the buying and selling of these instruments to be conducted in ways that will foster greater oversight.

Credit default swaps, which trade in a $60 trillion global market without government oversight, are contracts to insure against the default of financial instruments like bonds and corporate debt. They played a prominent role in the credit crisis that brought the downfall of investment banking giant Lehman Brothers Holdings Inc. last fall and nearly unraveled AIG, forcing the government to provide more than $180 billion in support.

Hedge funds, vast pools of capital holding an estimated $1.5 trillion in assets, operate mostly outside of government supervision. As the market crisis deepened last fall, hedge fund selling was widely cited as one of the reasons for increased volatility that pounded stocks and bonds. Hedge funds also suffered huge losses last year, notably from investments in securities tied to subprime mortgages.

The outline of the regulatory reform was unveiled a week before President Barack Obama is scheduled to meet for discussions among the Group of 20 major industrialized and developing countries in London to assess what needs to be done to deal with the global financial crisis.

While the administration is pushing other nations to follow the U.S. lead in putting together sizable economic stimulus programs to jump-start global growth, many in Europe are resisting those calls and arguing that the U.S. needs to do more to toughen financial regulations. They believe the current troubles can be traced to lax regulation in the U.S. over such key areas as hedge funds and credit default swaps.

Requiring hedge funds to register would open their books to inspection by regulators. The SEC sought that authority several years ago but was stymied by a federal appeals court in 2006.

Hedge funds have grown explosively in recent years while operating secretively. They have lured an increasing number of ordinary investors, pension funds and university endowments -- meaning millions of people now unwittingly invest in hedge funds indirectly.

http://finance.yahoo.com/news/Administration-unveils-apf-14754625.html

Taco John
03-26-2009, 11:20 AM
This bill is the very definition of communism.

Amnorix
03-26-2009, 11:21 AM
This bill is the very definition of communism.

Not until/unless they actually seize the institutions. Regulation doens't equal communism. Sorry.

KC Dan
03-26-2009, 11:24 AM
Not until/unless they actually seize the institutions. Regulation doens't equal communism. Sorry.
You are correct but it sure sets the stage and the available power will be so intoxicating that it will happen. "Absolute power corrupts absolutely"

Ultra Peanut
03-26-2009, 11:24 AM
COMMUNIIIIIIIIIIIIIIIIIZE

http://j.photos.cx/nau-f20.gif http://j.photos.cx/oligarchy-8a1.gif http://j.photos.cx/bilderberg-29d.gif

ROCK AND ROLLLLLLLLLLL

***SPRAYER
03-26-2009, 11:25 AM
I think it's time to finally make B.O. show his real birth cirtificate so we can nip this in the bud.

banyon
03-26-2009, 11:25 AM
Did this really require a new thread? How is this different than "Obama seeks power to communize non-bank institutions". Are you trying to compete with SHTSPRAYER for highest number of duplicated thread topics?

Taco John
03-26-2009, 11:26 AM
Not until/unless they actually seize the institutions. Regulation doens't equal communism. Sorry.


Oppressive regulation does, in fact, equal communism.

Taking decisions out of the hands of the private sector, and putting them in the hands of the ruling government class - that's communism.

Amnorix
03-26-2009, 11:26 AM
You are correct but it sure sets the stage and the available power will be so intoxicating that it will happen. "Absolute power corrupts absolutely"

errr...BANKS have been regulated for 80 years or whatever. Or did we go communist waaaaay back then and I didn't get the memo?

Taco John
03-26-2009, 11:27 AM
Did this really require a new thread? How is this different than "Obama seeks power to communize non-bank institutions". Are you trying to compete with SHTSPRAYER for highest number of duplicated thread topics?


The full plan has been unveiled.

Are you the thread police?

***SPRAYER
03-26-2009, 11:27 AM
Did this really require a new thread? How is this different than "Obama seeks power to communize non-bank institutions". Are you trying to compete with SHTSPRAYER for highest number of duplicated thread topics?

ATTACK THE THREAD! SMEAR THE THREADSTARTER! GUILT BY ASSOCIATION! NAAAAAAAAAAAAAAA!

Amnorix
03-26-2009, 11:28 AM
Oppressive regulation does, in fact, equal communism.

Read your own post about the proposal.

Taking decisions out of the hands of the private sector, and putting them in the hands of the ruling government class - that's communism.


Your comment is pretty irrelevant since the decision-making is going to stay at the private instutitions.

Regulation does NOT equal communism. Sorry.

***SPRAYER
03-26-2009, 11:29 AM
AD HOMINIM! CONJECTURE! OBFUSCATE! DERAIL THIS THREAD! NOBODY IS ALLOWED TO READ THIS ARTICLE WE MUST STOP! IT!!!!

jAZ
03-26-2009, 11:30 AM
This bill is the very definition of communism.

You don't know much about communism.

KC Dan
03-26-2009, 11:30 AM
errr...BANKS have been regulated for 80 years or whatever. Or did we go communist waaaaay back then and I didn't get the memo?
Regulating and taking over non-financial entities are far different things. It is the latter that I worry about.

***SPRAYER
03-26-2009, 11:31 AM
You don't know much about communism.

Teach us, commissar.

ROFL

Ultra Peanut
03-26-2009, 11:33 AM
http://j.photos.cx/national_review-d1d.jpg

***SPRAYER
03-26-2009, 11:34 AM
http://www.thepeoplescube.com/images/Guilt_Finger.gif

jAZ
03-26-2009, 11:35 AM
Regulating and taking over non-financial entities are far different things. It is the latter that I worry about.

We've taken over banks for years. We don't keep them. We just fix them and return them to the private sector or we close them slowly rather than rapidly.

Taco John
03-26-2009, 11:40 AM
Your comment is pretty irrelevant since the decision-making is going to stay at the private instutitions.



ROFL

The sad thing is that you actually believe this. You liberals are all the same.

Look at Harry Reid when he says that income taxes are "voluntary," but says you're a tax cheat if you don't pay them. His idea of voluntary is that you get to figure out how much you "owe" the government. You are "voluntarily" paying your taxes when you do that (as opposed to risking having your family destroyed as you're thrown in jail).

Look at the bailout corporate take over, where failing companies are given billions of dollars so they don't fail, and in exchange the government gets to call shots on executive compensation. And then the liberals call this "do or die" proposal "voluntary."

Now they're taking the "voluntary" out of this, and putting the decisions at the federal beuracrat level, and Amnorix says "the decision-making is going to stay at the private instutitions." "Oh, we're going to take your decisions away, but you're still going to be able to make them."

Communism is still communism even if you try to structure it to look like something else. Central authority over the economy is still central authority over the economy, even if you try to project the illusion that it's decentralized.

Taco John
03-26-2009, 11:42 AM
You don't know much about communism.

I would LOVE LOVE LOVE to hear your idea of communism.


I'll bet it involves rats! There have to be rats in everybody's kitchens in order for it to be communism, right!?

***SPRAYER
03-26-2009, 11:51 AM
ROFL

The sad thing is that you actually believe this. You liberals are all the same.

Look at Harry Reid when he says that income taxes are "voluntary," but says you're a tax cheat if you don't pay them. His idea of voluntary is that you get to figure out how much you "owe" the government. You are "voluntarily" paying your taxes when you do that (as opposed to risking having your family destroyed as you're thrown in jail).

Look at the bailout corporate take over, where failing companies are given billions of dollars so they don't fail, and in exchange the government gets to call shots on executive compensation. And then the liberals call this "do or die" proposal "voluntary."

Now they're taking the "voluntary" out of this, and putting the decisions at the federal beuracrat level, and Amnorix says "the decision-making is going to stay at the private instutitions." "Oh, we're going to take your decisions away, but you're still going to be able to make them."

Communism is still communism even if you try to structure it to look like something else. Central authority over the economy is still central authority over the economy, even if you try to project the illusion that it's decentralized.

Dude, B.O. is once again trying to sneak his communist agenda under the radar:

http://www.examiner.com/x-4285-Salt-Lake-Nonpartisan-Examiner~y2009m3d23-GIVE-Act-outlaws-citizens-right-to-protest

Something has got to happen with this guy. Get him drunk, dump him off in Kazakhastan, something.

jAZ
03-26-2009, 12:32 PM
Teach us, commissar.

ROFL

Ummm... unless the federal government completely eliminates private ownership of the means of production, and eliminates private ownership of capital entirely, and replaces everything with central planning... you don't have communism.

What Obama is proposing isn't remotely that. Hell, it's not even remotely socialism. His version of "socialized medicine" is based on the existing private, employer based healthcare plans for those that have it and prefer it.

I long for the days when the discussion here was hostile but at least remotely informed.

People here have gone full Cutler in the last 60 days.

It's stupid.

jAZ
03-26-2009, 12:35 PM
I would LOVE LOVE LOVE to hear your idea of communism.


I'll bet it involves rats! There have to be rats in everybody's kitchens in order for it to be communism, right!?

Oh, and rats with bats.

http://www.logodesignworks.com/images/mascot/hudson-river-rats-mascot.jpg

Taco John
03-26-2009, 02:35 PM
Come on jAZ. Enlighten us dopes on what Communism really is. Do all of our women have to wear head scarves in order for it to be communism? Government has to inject oppressive authority into the market AND our women have to wear babushka head scarves in order for it to be communism?

http://www.miusa.org/images/fcimagesfolder/russiaimages/babushkas

jAZ
03-26-2009, 02:39 PM
Come on jAZ. Enlighten us dopes on what Communism really is. Do all of our women have to wear head scarves in order for it to be communism? Government has to inject oppressive authority into the market AND our women have to wear babushka head scarves in order for it to be communism?

uhh...

Ummm... unless the federal government completely eliminates private ownership of the means of production, and eliminates private ownership of capital entirely, and replaces everything with central planning... you don't have communism.

What Obama is proposing isn't remotely that. Hell, it's not even remotely socialism. His version of "socialized medicine" is based on the existing private, employer based healthcare plans for those that have it and prefer it.

I long for the days when the discussion here was hostile but at least remotely informed.

People here have gone full Cutler in the last 60 days.

It's stupid.

jAZ
03-26-2009, 02:42 PM
http://www.miusa.org/images/fcimagesfolder/russiaimages/babushkas

http://207.199.174.56/img/thtQaAgIlX_communists.jpg

banyon
03-26-2009, 04:10 PM
The full plan has been unveiled.

Are you the thread police?

No, carry on TACOSPRYR.

Taco John
03-26-2009, 04:15 PM
Ummm... unless the federal government completely eliminates private ownership of the means of production, and eliminates private ownership of capital entirely, and replaces everything with central planning... you don't have communism.

What Obama is proposing isn't remotely that. Hell, it's not even remotely socialism. His version of "socialized medicine" is based on the existing private, employer based healthcare plans for those that have it and prefer it.

I long for the days when the discussion here was hostile but at least remotely informed.

People here have gone full Cutler in the last 60 days.

It's stupid.



Ah, I see... You are under the idea that Communism happens in one fell swoop...

Ultra Peanut
03-26-2009, 04:17 PM
Remember, B. Hussein Osama was educated in a madrassa!