3 Reasons The New Financial Regs Won't Fix Anything

The financial reform bill currently working its way toward President Barack Obama's desk for signing is being touted as the biggest overhaul of the banking and investment sectors since the Great Depression.

But the new regs won't be any more effective than the ones they replace in fixing anything or preventing the next major panic for at least three reasons.

1. New Watchdog, Old Tricks

They create a new watchdog consumer agency designed to protect consumers from their own supposed stupidity. You'll now be facing fewer choices when it comes to getting credit cards, loans, and other basic financial transactions.

2. Never Too Big To Fail

They replace "Too Big to Fail" with... "Too Big to Fail." One of the reasons why major financial institutions played Russian Roulette with the economy was because they were betting they would get bailed out. Which is precisely what happened. The new rules codify the idea that the government will make sure certain institutions can never fail. And if you think the big boys won't game that system, then you don't understand how well Citigroup, Goldman Sachs, et al have come through the current meltdown.

3. Housing Bubble Trouble

The financial crisis was set into motion by government policies that encouraged people to buy homes they couldn't afford at prices that were unsustainable. Between desperate attempts to keep people in houses and to keep interest rates below an effective rate of zero, the government continues to pour more money down the same rathole.

Markets work best when the risk and reward incentives are clear cut. When investors know they really can lose it all, they act responsibly with their money. If regulators think they can create a system that cushions us from bad decisions and doesn't encourage bad behavior, it's a delusion we'll all be paying for for a very long time.

1. New Watchdog, Old Tricks

They create a new watchdog consumer agency designed to protect consumers from their own supposed stupidity. You'll now be facing fewer choices when it comes to getting credit cards, loans, and other basic financial transactions.

2. Never Too Big To Fail

They replace "Too Big to Fail" with... "Too Big to Fail." One of the reasons why major financial institutions played Russian Roulette with the economy was because they were betting they would get bailed out. Which is precisely what happened. The new rules codify the idea that the government will make sure certain institutions can never fail. And if you think the big boys won't game that system, then you don't understand how well Citigroup, Goldman Sachs, et al have come through the current meltdown.

3. Housing Bubble Trouble

The financial crisis was set into motion by government policies that encouraged people to buy homes they couldn't afford at prices that were unsustainable. Between desperate attempts to keep people in houses and to keep interest rates below an effective rate of zero, the government continues to pour more money down the same rathole.

Markets work best when the risk and reward incentives are clear cut. When investors know they really can lose it all, they act responsibly with their money. If regulators think they can create a system that cushions us from bad decisions and doesn't encourage bad behavior, it's a delusion we'll all be paying for for a very long time.

Approximately 2 minutes. Produced by Meredith Bragg and Nick Gillespie, who also hosts.

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[wdcsucks1]

everything going on in washington is not meant to fix or prevent, its meant to take over and destroy whats left. come on people, didnt you get it yet?

[order9066]

@TheAtheistAllegiance FDR ran for the Presidency by promising to govern the opposite of Hoover's interventionism into the American economy. Yet, he continued Hoover's policies and doubled-down. Investors stayed on the sideline under FDR's hostile business climate, war rationing didn't help either. Read "The Roosevelt Myth" by John T. Flynn. FDR's devaluation of the dollar by 40% was made possible by illegally stealing citizen's gold. FDR's death was the best thing ever to happen to America.

[felpaluche]

Definitely true. Attitudes cannot be changed overnight.

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[Drivenk]

This is a good simple explanation of bubbles

[bittergunowner12]

The clip of Tax Cheating Timmy makes me bust up laughing.... and this is our Treasury Secretary!

[gunguy54]

This guy is a dictator with Congress in his pocket.

[Mechanized0]

@wdcsucks1 One would think individuals would understand that government is not their parents but rather is their adversary.

[yakyakyak69]

"We now stand on the verge of victory... take us over the finish line"

The Progressives have almost collapsed American in hopes that we will "fundamentally change" into a socialist nation.

From the rubble comes a glorious One World Socialist-Corporatist Order of, by and for the banking elite, their giant corporations and the political class they own and control like puppets.