Dodd’s Bank Bill: Worse Than ObamaCare. It’s the Nationalization, Stupid!
by John BerlauThere are many bad things contained in Chris Dodd’s Restoring American Financial Stability Act,” the financial regulatory “reform” bill that after filibustering for three days — with the assistance of Nebraska Democrat Ben Nelson — Republicans agreed to let come to the floor for amendment and debate.
Among its horrors are a massive new consumer agency with the power to track virtually every financial transaction to share with other big agencies like the IRS, onerous new restrictions on angel investors and venture capital that greatly delay funding promising startup firms, proxy access provisions that would federalize state incorporation laws and empower unions and other progressive shareholders to wage director campaigns at the company and other shareholders’ expense, and no attempted reform of the government-sponsored enterprises Fannie Mae and Freddie Mac at the center of the financial mess.
But the most destructive portions of the bill — the one that would in my judgment go beyond even Obamacare in making the American free enterprise system unrecognizable — has been little discussed even by critics of this bill. To put it bluntly but absolutely accurately, this bill sets up a mechanism for the Treasury Secretary, the Federal Reserve, and the Federal Deposit Insurance Corporation to nationalize virtually any business they deem to be a threat to American “financial stability.”
I include myself among these critics not focusing on this issue and I apologize for not informing readers sooner, but I wanted to be sure the bill would do what I suspected it would do. Many of the bill provisions are interconnected, and what can seem like a mild measure by itself becomes lethal when combined with another sections. As Financial Times columnist Gillian Tett recently wrote: “Buried in [the bill’s] pages are numerous clauses and sub-clauses, many of which have been largely ignored until now (partly because they strike most non-financiers as pretty dull). Yet, the fine print could turn out to be crucial in the coming years.”
And after reading and rereading the “fine print” of this 1336-page piece of legislation (which will grow by hundreds more pages when amendments are added), it is clear that the bill’s “orderly liquidation authority” would facilitate outright government seizure of a wide variety of firms with very limited judicial review.
The first clue of what the bill would do in this regard comes from one of the bill’s architects. House Financial Services Committee Chairman Barney Frank, author of the similar financial bill that passed the House in December, has freely used the term “death panels” to describe the new powers the bills give the government over firms. In response to charges of “death panels“ in the health care bill, Frank responded that the panels were in the wrong bill. “Yes, we have death panels, but they got the death panels in the wrong bill,” Frank said on the House floor. “The death panels are in this bill.”
Defending against charges that the bills’ new mechanism to wind down firm will lead to taxpayer bailouts, Frankwrote in the Huffington Post that under this authority, “Shareholders are wiped out, unsecured creditors are out of luck, management and every employee that is not required to shut down the company is fired.” What Frank and other of the bills’ architects don’t say — not even in liberal venues like the Huffington Post — is that the bills also give the government these same powers to take over firms not seeking any kind of government aid.
Section 203 of Title II of the bill empowers the Secretary of Treasury, with a two-thirds vote from the Federal Reserve and the Federal Deposit Insurance Corporation, to take into government “receivership” any “financial company” whose failure he determines “would have serious adverse effects on financial stability in the United States. “
Once the Treasury Secretary puts the company into “receivership” of the FDIC, the government may — under Section 210 — “take over the assets of and operate the covered financial company with all of the powers of the members or shareholders, the directors, and the officers of the covered financial company, and conduct all business of the covered financial company,” “perform all functions of the covered financial company, in the name of the covered financial company,” and “ provide for the exercise of any function by any member or stockholder, director, or officer of any covered financial com1pany for which the Corporation has been appointed as receiver under this title.”
The ostensible “purpose” of this “orderly liquidation authority,” as stated in Section 204, is to “provide the necessary authority to liquidate failing financial companies that pose a significant risk to the financial stability of the United States.” Yet the funny (or not-so-funny) thing is that firms don’t really have to be “failing” to be taken over.
The Treasury Secretary can seize, under Section 203, any firm “in default” or “in danger of default.” And it’s clear that this “danger of default” does not need to be an immediate danger. The word “likely” appears many times in this section’s listing the criteria of a firm that can be taken over. A company can be in danger of default if “the assets of the financial company are, or are likely to be, less than its obligations to creditors and others; or the financial company is, or is likely to be, unable to pay its obligations [emphasis added].” The word “likely” itself is never defined, so up to the Treasury Secretary and Federal Reserve to make that determination.
Pretty dramatic new powers, huh? But, of course, most businesses won’t have to worry because this just affects “financial companies” like investment banks, right? Not exactly. “Financial company” is defined very broadly in Title II, as in other sections of the bill.
Recall that for purposes of Federal Reserve regulation and paying assessments for bailout of failed firms (though now after the failure, rather than through the $50 billion bailout fund that Dodd agreed to get rid of after to GOP mini-filibuster, a slight improvement), a “nonblank financial company” is defined as a firm “substantially engaged in activities in the United States that are financial in nature.” (See my previous piece, “The Obama-Dodd-Frank-Everything’s-A-Bank-Bill.”)
Also, last week orthodontists visited Capitol Hill because they were concerned that they would be subject to the new Bureau of Consumer Financial Protection if they offer installment plans for their patients to pay for braces. Dodd denied this, but a Bloomberg story pointed that the bill’s language grants jurisdiction to the bureau over any business that is “engaged significantly in offering or providing consumer financial products or services,” and the term “significantly” isn’t defined.
Similarly, under the definitions Title II, a “nonbank financial company” supervised by the Federal Reserve would be subject to the “orderly liquidation authority.” So if the Treasury Secretary and the Federal Reserve decide that a manufacturer, retailer, or even an orthodontics practice “would have serious adverse effects on financial stability in the United States,” they have the authority to send it to what Frank calls the “death panel.”
The authors of this bill still, however, are still left with one pesky problem: the courts. There’s always the possibility that some “backward” judges might actually take the Constitution seriously and see such a government seizure as a violation of the Takings Clause of the Fifth Amendment, the Due Process Clause of the 14th Amendment, the limitation of the federal government’s power in the 10th Amendment, or numerous other constitutional provisions that protect contracts and property rights and separate America from Argentina and Venezuela.
To try to prevent constitutional and other challenges , Section 202 of the bill creates a three-judge “orderly liquidation authority panel” in the federal bankruptcy courts to rubber-stamp the government‘s actions. This court would have just 24 hours to review a government seizure and could only stop it if it found “substantial evidence” the seizure was justified. As Heritage Foundation regulatory scholar James Gattuso recently put it, this means “that the seizure must be upheld if the government produces any evidence in favor of its action.”
The bill even sharply curtails Supreme Court review to attempt to block constitutional challenges. “Review by the Supreme Court under this subparagraph, shall be limited to whether the determination of the Secretary that the covered financial company is in default or in danger of default is supported by substantial evidence,” says the bill on page 117.
Sen. Mark Warner, who was substantially involved in drafting the bill, said during a speech that “resolution should only be used as a last resort.” For those interested in freedom and true financial stability, stopping this bill’s creation of a resolution/nationalization authority — a power that should not to be given to the Obama administration or any administration regardless of party — should be the first resort.
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445 Comments
I bet the author of this article thinks that bankruptcy court is also nationalization.
Bringing anything to the floor for "debate" in this congress simply means it's now rubber stamped for passage. Why do I feel like I'm watching another rerun of Lucy holding the football and Charlie Brown attempting to kick it only to get fooled again?
Have the Republican members of Congress not figured out that their job is to filibuster, block, delay or impede the radical leftist agenda of this administration in every way possible until the November elections?
Anyone?
Bueller?
The GOP better learn to step up to the plate, if they don't want to see their jobs going to 'new blood' in November! I have had enough of their waffling back and forth to everything that this administration wants! We are heading into European Socialism and disaster if this is not stopped!!!
Because Wall Street's done such a great job with their self-regulation…
More punitive crap from the teflon coated, ethically challenged, lame duck Dodd. Why is he punishing us after getting away with crimes for so long? He and his co-conspirator Frank, must be stopped.
I bet the author of this comment is mentally bankrupt.
Uh Grammar police anyone? Was it just me, or did John need to proof read before posting this…?
This is it folks! This is our SociaIism bill! If this passes we are DONE! This Bill violates practically the entire constitution. It violates everything we are.
We are one step away from joining the ranks of Cuba and Venezuela! We will not have any rights left by 2012.
Because he has been outed as a crook and can't stand the sunlight.
Free Speech wrote:
"Because Wall Street's done such a great job with their self-regulation… "
RESPONSE: The origin of the problem was the Community Redevelopment Act whereby the feds threatened banks and forced them to make loans to those who had no intention or hope of repaying the loan. Funny how you left that out. If you're a taxpayer, then you're on the hook for these bad loans. Then again, you're a liberal so you probably don't pay taxes and don't care if others get hurt paying confiscatory tax rates.
Got nothing to say, except for personal attacks?
c.dudd waving that finger at the evil sinister "We The People" other finger pointers : bclinton, obamasoros, tkennedy, ahitler, check it out. Good ridence you thief.
Dodd sure bears an uncanny resemblance to a snarly rat in that photo.
What will it take for the republicans in Congress to understand we DO NOT WANT legislation to be crammed down our throats. We do not like stealth legislation hidden in huge bills written by regulators. Stop all legislation until the 112th Congress, and maybe,just maybe honorable citizen legislators will undo the damage. If Congress was a newspaper, I'd yell, "STOP THE PRESS!"
Bankruptcy is allowing a company or person to restructure and/or eliminate debt. The government does NOT assume control. What this article is saying is that under the Dodd bill the government has the authority to assume control of ANY financial firm that THEY believe would “would have serious adverse effects on financial stability in the United States. “
Your lack if intellect is alarming but understood as a kool aid drinking proglodyte is not allowed to think for themself.
A large part of the blame must go to both Dodd and Barney Frank who forced banks to make home loans to people that could not afford them. Try thinking for yourself Troll
I would have mixed emotions if Sen. Dodd and Rep. Frank went over a cliff in a new Lexus. What a waste of a damn nice car!
Fire Dodd!
These RINOs want to be "liked" by Obama's administration. Six months will bring irreversable damage to this Country and to Americans. If they are not against Obama then they are for Obama. Sometimes I believe the only thing they will understand is the guilletine, sad to say they are Not afraid of us. This must change.
Comparing this bill with bankruptcy law only shows your complete lack of comprehension.
wohlfguy, "Flea Speech" is a paid troll, along with a few other fleabaggers that show up here. You can tell by the fact that they show up as one of the first comments on a consistent basis. Their job is to disrupt and divert. Don't give them a second thought.
"one of the bill’s architects. House Financial Services Committee Chairman Barney Frank"
This is all anyone needs to know to prove that the bill is a disaster. The same man that claimed Fannie Mae was in no financial danger at all. One of the dumbest creatures to ever disgrace the congress.
The government should be there to punish law breakers, not to make it impossible to break any laws. Doing so only stifles freedom and the liberty of law abiders — the vast majority of Americans — while crushing growth, innovation and success. All those things are evil, apparently, to liberals.
Thanks John
I know that they are trolls but sometimes I can't helpmyself. Their ignorance is staggering.
In chapter 7, the most common kind of bankruptcy, the court either orders the business to cease operations or appoints a trustee to sell off the assets to the creditors.
In that case, the court, a part of the ebil govmint, appoints someone to take control of the business and sell off the assets.
I'd say that is assuming control.
And what's the percentage of those kinds of loans vs. the total amount of mortgages that were part of this speculative boom?
Yes, anyone who disagrees with you is a paid troll.
Do enlighten me.
Free Speech, Stop your silly tin hat theories about the govt… Please note "Free Speech" is engaging in anti govt rhetoric.
Not just a paid troll but a jackass also
Selling off assests is not taking control of a company dipsh*t. The company is being disolved like what happened to your brain. Re read the article!!!
Impossible
Pee Speech, you couldn't walk one block carrying a copy of all the regulations Wall street has to follow.
Such eloquence, such wit.
A regular Oscar Wilde in our midst.
Not sure but look at what is happening to Freddie and Fannie. Just asked for another $8.5 BILLION!!! and they are not being regulated as part of Dodd's "reform". We are on the hoof for nearly 1/2 TRILLION for Barney's roll of the dice. I have yet to see even one proglodyte admit that Dodd and Frank had a big hand in the housing bubble.
A government-appointed trustee takes control of the company in a chapter 7 and sells its assets.
How is that not taking control?
Not to mention the damage to the environment from the gas spill when it lands.
Thank you for admitting it.
This from someone who doesn't understand bankruptcy law?
Priceless.
The estimates I've read suggests that 20% was because of Freddie and Fannie mortgages.
That leaves 80% in pure private sector speculation.
Government appointed is not the same as the government. But to the original point, the Dodd bill DOES allow the government to take over any firm they deem is a risk to the economy. Is that okay with you? Tell me one, just one government program that runs efficiently and on budget.
Compared to you Free Leach, Ed Wood would look like Oscar Wilde.
Meh, I could fit all that in my iPad and still have room for a couple of HD movies.
and the real shame is that their was room for Pelois and Reid!
It's called an officer of the court overseeing the bankruptcy process, a far cry from the US Government taking over operations, replacing the CEO and directors, infusing the company with taxpayer money, and trying to change their business model, as they did unsuccessfully with GM, who is *still* losing money every quarter…..
After a relatively long time with well established checks and balances, unlike this financial fiasco bill.
Before one can be enlightened, they first have to be willing to stop speaking and listen……
What is priceless is your toal lack of any original thought
OH !!!! I get it!!!
a dim bulb wanting to be 'en-light-ened… !!
Good one Free Leach!!!
So if your figures are correct (and since most of your research seems to be very left leaning the #'s are very suspect) then since Frank and Dodd were only responsible for $100 Billion in loses then its okay and they should not be blamed. Is this correct or are you going to admit that they helped caused the housing problem?"
Do you agree with me that in a chapter 7 bankruptcy the government does take control of a business, albeit through a court-appointed trustee?
Hey Free Speech,
In a bankruptcy court, the company itself or one of its investors or creditors petitions for bankruptcy.
The Treasury Secretary, the Federal Reserve, or any other government actor can't initiate the process.
The fact that they initiate this process with very limited judicial review makes it nationalization.
Others have answered you well, but I wanted to second them.
I think the tea party people should get more active and go out and recruit people,
kind of like acorn did but without the intimidation of course….I'm afraid that they
may not have the numbers needed to get rid of a lot of these Dems and Rinos…
I hope I'm wrong!
We will simply Reverse Everything from Heathcare to what ever else is done, vote these power madd communist out of our White House….Dang mess our country is in over One black inexperience communist president.
Pea Speech, check out http://www.youtube.com/watch?v=1RZVw3no2A4
or check out the South Park explanation.
they explain it better than NPR or PMSNBC could ever do it
But Obama couldn't. He says he doesn't know how to use it…
No
20% – about 30 million mortgages… for a number, average 100k per mortgage, times 30 million, comes to about THREE BILLION in defaulted loans. Thats before counting the mortgage loans taken out by people speculating in the housing market, on homes they never intended to live in, but just hold on to for a while then sell at a profit, or the otherwise good mortgage loans that defaulted when the market tanked and unemployment jumped to over 10%
The easy loans for unqualified lenders drive housing prices up, fueling the housing bubble, causing everyone else who bought a home to end up with a loan for an inflated market value home, and left them sitting on a devalued house after the bubble popped, often with a loan for an amount greater than the value of the house.
This was all a direct result of the Community Reinvestment Act, government imposed REGULATION requiring banks to write a certain percentage of their home loans to what were, in effect, unqualified borrowers. Created in the 1970's under Carter, expanded under Clinton (the percentage of unqualified loans banks were required to make was increased), fueling the expansion of the derivatives market as banks sought a mechanism to insulate themselves from the inevitable defaults on these loans, all while Fannie and Freddie were buying up bad loans and coking their books to show a profit (Raines….?) while Pelosi, Dodd, Frank, Waters, and others were insisting that everything was sound going forward, all the way up till august of 2008.
There's regulation, and there's bad regulation, and when the Democrats get involved, it's most often bad regulation. And now they're pushing even more bad regulation on top of other bad regulation.
Two bads do NOT make good.
Even small community banks have over 1000 seperate regulations they have to follow in day to day operations.
A statement like yours only shows you have no clue how regulated the financial system really is
Stan,
Not necessarily. They still need 60 votes to end debate and have a floor vote on the bill itself. There's still time for some education on this and the other horrors of this bill.
Best,
John
Again, we should be discussing the roots causes of why Americans don't care about the passage of a bill that ends the free enterprise, capitalist system. It's because of our tax structure. Half of the country does not pay federal income tax. Think people: For that half, why wouldn't they want the government to take over the private sector? The dems have set up a guaranteed voting base. You pay nothing, you get free stuff as long as you vote for us. These politicians and the scum (half the country) have made an open pact with each other to steal the country and make us who work full time pay for it. Why are the stealing? Because they can. "yes, we can." "si, se puede"
This bill is blatantly unconstitutional. Still, something needs to be done. Republicans would be smart to work with Democrats on this. That way they can take out most of the bad stuff and we can still get some type of needed reform. The healthcare bill is a good example of this. By not working with Dems, we got stuck with a terrible bill.
Hopefully, if Republicans don't work with Dems on this bill, they can at least stall it until after the mid-terms. Their best hope of doing this is pointing out the provisions in the bill that monitor the financial activities of everyday Americans. Most Americans are so sick of Wall Street they won't have any sympathy for restrictions on them.
Almost nothing that gets passed ever gets repealed. As soon as a bill becomes law, a lobbying group springs up around it and fights any attempt to repeal it. Republicans have to either fight this bill or work with Dems to make it better, because once it passes, we are stuck with it.
Then you're an idiot.
AFTER THE MESS THIS MAN, DODD, AND HIS COHORT, B. FRANK, PUT THE ECONOMY OF THIS COUNTRY IN, THIS MAN SHOULD BE NOWHERE NEAR ANYTHING FINANCIAL. HE ISN'T HONEST EITHER. LOOK AT HIS SWEETHEART MORTGAGE DEALS, AND HE HAS YET TO LET THE EVIDENCE BE SHOWN, AS TO WHAT HE HAS DONE. HIS HAND IS PROBABLY STILL OUT, RAKING IN EVERYTHING HE CAN. IT WILL BE A GOOD DAY, WHEN HE IS NO LONGER IN GOVERNMENT. GO NOW, DODD.
[...] Berlau, a scholar at the Competitive Enterprise Institute weighs in at Big Government: Among its horrors are a massive new consumer agency with the power to track virtually every [...]
Self Regulation? I think you mean complete failure of existing government regulators.
You're clearly just making up your 20%-80% numbers…good technique I suppose. The evil private sectors 'speculation' you're talking about is the government telling banks to open their credit lines. To tell them to conduct business in a manner that aligns with their belief that 'every american should own a home', and to keep interest rates artificially low to do so.
You think it's just a coincidence that banks abandon sound lending practices once you have government run enterprises to purchase their failing mortgages? That's why Fannie and Freddie now own over 90% of all mortgages….astonishing isn't it? The government created the true 'speculative bubble' you're talking about. Clearly there would have been a dropoff for everyone due to inflated house prices, but the systematic risk to the entire economy was made entirely possible by government intervention.
Others have answered "Free Speech" well on the obvious differences between this "orderly liquidation authority" and the bankruptcy courts that the Founding Fathers envisioned for the judiciary, not the Executive Branch. But let me elucidate.
In a bankruptcy court, the company itself, or sometimes one of its investors or creditors, petitions for bankruptcy.
The Treasury Secretary, the Federal Reserve, or any other government actor can't initiate the process. Only the firm or parties who have direct stakes the firm can ask the court to rule.
The fact that powerful executive branch officials initiate this seizure process with very limited judicial review makes it nationalization. Also, as the article notes, the firms they decide to take over need not be in default, but merely in "danger of default." This gives the government a lot of wiggle room to seize firms.
The fact that under this bill they initiate this process with very limited judicial review makes it nationalization.
Others have answered you well, but I wanted to second them. Report Reply
I will be pleased to see Mr. Dodd in a prison uniform.
Great argument. In one scenario the company VOLUNTARILY goes into bankruptcy and the government assigns a third party to assit in selling assest, in the other the government takes over control of a company (without the companies authorization) it deems a risk, even if it is not in danger of collapsing. Yeah sounds the same to me. Idiot? Look in the mirror.
Read your opening comment there Free Speech,……….and,….
I tended to agree with you about the Wall Street "greed" factor, I suppose, you were referring to.
Then you start to come out of your Pinata swinging mood.,…….
you really should tone it down a tad,…….you just might be able to contribute,…..such as,………..
"…………20% ,………..That leaves 80% in pure private sector speculation,…….."
If this indeed true, I sure would like to know more.
Got nothing to say, except for personal attacks?
Such eloquence, such wit.
A regular Oscar Wilde in our midst.
I've noticed that when one makes a simple statement critical of an article on this site, they get nothing but personal attacks – no real debate…
Creditors filing a bankruptcy petition and forcing a company to go into bankruptcy is not something that a company does voluntarily.
That is called an "involuntary bankruptcy."
So you're wrong.
Dodd….go away, please ! You have done enough damage to the country…already
So the trustee, a representative of the courts, becomes in charge of the business… hmmm
That sounds like government take over of business…
Maybe we should eliminate bankruptcy courts.
See above for an explanation of involuntary bankruptcy.
Couldn't one argue that because the people who make up those businesses are tax payers, the government has a vested interest in stepping into bankruptcy proceedings?
And a bankruptcy can be forced upon the business by its creditors.
It's called an "involuntary bankruptcy."
This bill is just an extension of this concept.
Still not the same. I'm through with you for now
What if the government is the creditor?
"Republicans would be smart to work with Democrats on this"
I disagree, The primary in Utah showed us just how major this next election will be. Anything that 's rammed through congress in the next 5 months will likely be reversed and this bill is no exception. There is no way this should be allowed to come to a vote. No way at all. Nothing of any significance can possibly be addressed before the next congress is sworn in to represent the people.
In the case of financial institutions, the government is a creditor.
The banks borrow money from the government, so this is an extension of bankruptcy law.
why do I feel like I am in a "time warp"…take your pick…Germany 1930's, Cuba 1960's, Venezeula 2000's….if we do not stop the insidious removal of our freedom by government (democrat and republican) we have been shown what the eventual outcome will be for each of us. This bill must not pass!
Among hunderds of other bad things, this bill lets the Government arbitrarily decide that a bank or a business is distressed, and walk in and take it over.
No recourse through the court system….
No accountability to the taxpayers, since the board making this arbitrary decision is appointed, and not confirmed by Congress…
It leaves a very wide door open for politically based persecution and favoritism, since the panel deciding that an entity is distressed does not have to PROVE the claim, only make it.
Now how is that the same as bankruptcy again, forced or otherwise……?
The guy who got a personal loan sweat heart deal from Country Wide before they went out of business, blocked regulation of Fannie Mae, who is in bed with Wall Street and who will soon be either a lobbyist or a CEO, writes law just before he bows out of the Senate because of his poll numbers and it is being pushed through. And no one has read the bill. Dodd, Arnold, Obama, Boxer, Specter, Kennedy, Frank; they are cut from the same mold and yea, they all need to go.
In the case of financial institutions, the government is a major creditor.
As such, a creditor has the right to force a financial institution into bankruptcy.
The government is supposed to use the bankruptcy court system, just like everyone else.
Not just walk in, fire the board, and take over.
The idea is that in a system of checks and balances, the government must demonstrate to an arbiter like a judge that the company or financial institution is in dire enough straits to justify the government seizing the company's assets or taking control entirely.
The point being that a court must look at the accusation and judge independently whether or not the accusation is valid, *and* give the company a voice in the proceedings, as well as an opportunity to broker an agreement that is palatable to both plaintiff and defendant.
This bill circumvents that entirely. This is not a good thing.
The only thing that ever seems to come from republican attempts at bipartisanship is the republicans bending over and signing off on what the Democrats want, in exchange for a few meaningless scraps.
The culture of making dels on everything is part of the problem in washington, and it needs to be stopped, like earmarks and other practices.
Any financial institution that goes through this liquidation process must do so through the federal bankruptcy courts, so there are judges determining if the accusations are valid or not.
THROUGH THE COURT SYSTEM< LIKE EVERYONE ELSE
Are you intentionally ignoring that, or incapable of comprehending it?
Can't these folks be recalled or impeached ? Don't they serve at our pleasure? Kick their butts out! Makre them understand it is our way or the highway.
This bill circumvents that. What IS it about that that you refuse to wrap your head around?
Why don't you go read the bill, and then get back to us……?
Re read the article. The government can take over any financial company WITHOUT court approval. As your friend Anon would say.. God you people are stupid!
It's patently obvious that FS has no clue what is really in the bill, but is so ideologically stratified that it blindly clings to what it has been told about this bill by it's favorite propaganda outlets.
The irony is that freedom of speech guarantees the right for anyone to voice their opinion, no matter how ill informed it is……
This bill requires that the liquidation process goes through the federal bankruptcy courts.
From the article above:
Section 202 of the bill creates a three-judge “orderly liquidation authority panel” in the federal bankruptcy courts.
Aw c'mon. We've got to pass it so we can find out whats in it!!!
Wall Street was prevented from self-regulating itself because the government interfered with the fail-safe mechanism that ensures self-regulation in all instances. That mechanism extracts a price for accepting too much unwarranted risk, which price is the failure of the company that has done so if the unwarranted risk materializes with the investors/shareholders of that company being wiped out and losing their total investment in the company. The government interfered not once but twice with respect to the recent meltdown of the financial markets. The first instance of interference was the government mandate that lenders make mortgage loans available to individuals who would never qualify for a mortgage loan in the unfettered market place. This set the stage for the second instance of government interference. Those worthless mortgage loans were securitized and sold by the trillions to investors in the form of mortgage-backed securities or derivatives thereof. When the borrowers defaulted en masse on the trillions of dollars of bad mortgage loans comprising these securities the government stepped in and bailed-out the companies holding these bad investments instead of allowing the self-regulating mechanism of the market to impose its solution, failure of the companies and total loss to the investors.
Doesn't mean we can't try like hell!!
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