From Investors Business Daily:

While not blameless, Wall Street is an easy scapegoat. And investment houses that made billions slicing and dicing mortgages into CDOs, derivatives, credit default swaps and other exotic paper are easy to demonize. But the problem wasn’t these financial instruments. Or even the obscene profits they generated. Mortgage-backed securities were nothing new, and we’ve always had speculation in the market.

The problem was the underlying assets: low-quality mortgages. We’ve never had so many junk home-loans poisoning the financial well before. And who poisoned the well? Washington and its affordable-housing policies.

It was Washington that declared prudent home-lending standards racist and gutted traditional underwriting rules in the name of diversity. It was government that created the risk on Main Street.

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Political advantage can be fleeting. A couple of months ago, during the winter quarter, job gains looked to be picking up, unemployment was easing lower, and President Obama’s reelection hopes looked more secure. But things sure have changed.

In recent weeks, a whole bunch of new economic stats have been pointing to a sputtering economy — maybe even an inflation-prone, less-than-2-percent-growth recession. Stocks have dropped five straight weeks, as they look toward slower growth, jobs, and profits out to year end. And Friday’s jobs report didn’t buck these trends.

“Anemic” is the adjective being tossed around the media. According to the Labor Department, nonfarm payrolls increased a meager 54,000 in May, while private payrolls gained only 83,000. A week or two ago, Wall Street expected 200,000-plus new jobs. Didn’t happen.

Perhaps the most telling weakness in the jobs report comes from the household survey, which is made up of self-employed workers. Think of mom-and-pop owned stores and small businesses. Think of the Main Street entrepreneurial families who make up the backbone of the economy, and for the matter the country. And they vote, too.

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President Obama is coming to Youngstown today to tout his administration’s recovery efforts, but its policies are only making matters worse in the Mahoning Valley.

While it’s encouraging that the factory in Youngstown that the president will visit on Tuesday has recently expanded, the city’s painfully high 15.1 percent unemployment rate is a harsh reminder that the “stimulus” has not created jobs “immediately,” or held our national unemployment rate (9.9 percent) below eight percent as the president promised.

Worse yet, the policies of the Obama Administration could quickly put jobs at the factory, which manufactures steel pipes for oil and gas drilling, on the chopping block as it continues to push a “cap-and-trade” national energy tax that will raise energy prices, drive thousands of American jobs overseas to countries with less-stringent environmental regulations, and devastate our domestic oil and gas industries.

Last December the administration unilaterally acted to pave the way for this bureaucratic nightmare, and it’s not looking back. In fact, last week the EPA finalized new rules for manufacturers and power plants scheduled to go into effect in January of next year, regulations that American Iron and Steel Institute President and CEO Thomas Gibson warns “will impose significant new costs on manufacturing industries at the worst possible time… [and] arbitrarily picks winners and losers.”

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News reports last week suggested that 130 companies that cater to main street concerns — like Harley Davidson — had hired lobbyists because of the impact the financial reform legislation will have on their business. The regulatory boondoggle will affect almost every entity that caters to middle class America — from car dealers to dentists. That’s right dentists.

News from Washington is that the group representing America’s dentists are now in freakout mode over the bill. Most dentists offer payment plans. If Johnny need braces, dentists offer payment plans that help the middle class afford them. If the financial reform bill is enacted into law, the federal government would regulate the plans.

This is a prime example of how the legislation — while proporting to regulate Wall Street will actually regulate Main Street.

Yet Citi and Goldman Sachs are supporting the legislation supposedly aimed at them. If Wall Street wants this bill and Main Street is harmed by the bill, how exactly is this Wall Street reform?

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Sen. Susan Collins (R-ME) understands that the Dodd Financial Reform bill they are trying to ram through the Senate is a bailout.  She has publically opposed the legislation.  But that hasn’t stopped the Administration from pressuring her to change her mind.

The Wall Street Journal reports that Treasury Secretary Tim Geithner will be meeting with Sen. Collins to try to get her to see a different version of reality.

But, the American Enterprise Institute’s Peter Wallison says that not only is the bill a bailout but it would benefit Goldman Sachs”  “That act—paying off the creditors when the government takes over a failing firm—is a bailout. It doesn’t matter that the management lose their jobs, or that the shareholders get nothing. When the creditors are aware that they will get a better deal with the failure of a large company than they will get with a small one that goes the ordinary route to bankruptcy, that is a bailout.”

To top it off, the fees for the Dodd bill’s resolution fund that would pay off a failing firm’s creditors would come not just from banks but from a broad array of Main Street businesses. Stable life, auto and home insurance companies would have to pay into this fund to subsidize the failure of the next high-roller, and the fees they pay would likely be passed on in the premiums their policy holders pay. And the bill’s definition of  “nonbank financial company” is so broad that it could cover manufacturers only tangentially involved in extending credit, such as those that lease equipment to their customers. This would raise prices and cost Main Street jobs.

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President Obama’s advisers assure us that he will use his State of the Union address tonight to deal with our nation’s ailing economy. Americans have already begun to hear talk of a “hard pivot” at the White House, away from health care and towards jobs.

Yet in economic terms, the president’s shift thus far has been more of the same: more government control and less individual freedom.

His attacks on banks—including a new tax that will invariably be passed on to consumers—caused stocks to plummet last week. He has targeted some banks for being “too big,” but without ending the costly policy of “too big to fail,” which removes the discipline of risk and reward. He crowed, “We want our money back,” but wants to use “our” money for his own spending programs, not for tax relief.

The central idea of the President’s new plan appears to be shaping up as a jobs program, in imitation of FDR’s public employment programs during the Great Depression, and funded by new taxes on Wall Street.

The plan is not about job creation—more jobs could be created by the private sector—nor is it about recouping the bailout. It is primarily about redistribution—and is based on old, bad ideas.
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