WHY THE FINANCIAL REFORM BILL(S) SUCK

Yesterday I wrote about President Obama's Wall Street speech. In his talk he tried to make it look like he's confronting Wall Street when, in fact, he's doing little more than trying to make them feel better about "the mob" on Main Street.  At a time when the nation is looking toward their government to do something about Wall Street's gambling, their social indifference, and their undeserved rewards, President Obama pretty much told Wall Street's speculators and profiteers, "Go ahead and keep the loot ... but be warned, we're turning our home alarms on this time."

That ought to scare them.

Compare that with what Franklin D. Roosevelt did in 1936. As the Huffington Post pointed out, back then Franklin D. Roosevelt raised the ire of Wall Street's biggest financiers when he told America, "We know now that government by organized money is just as dangerous as government by organized mob." Telling Wall Street that their actions before 1929 were akin to unruly mob rule set the tone for this classic from FDR:

"Never before in all our history have these forces been so united against one candidate as they've been today. They are unanimous in their hatred for me and I welcome their hatred."

President Obama, for his part, asked "organized money" on Wall Street to join him in supporting reform because it's not only "in the best interest of our country, but in the best interest of the financial sector.”

Woh. Slow down there Mr. President. We all know how much Wall Street's sociopaths like being lectured to, and how they respect the common good. If he continue along these lines President Obama might even get Wall Street to voluntarily give up their hard earned bonuses (not). Count me as unimpressed.

The primary problem I have with President Obama's approach yesterday is that, as Paul Krugman put it, "Mr. Obama should be trying to do what’s right for the country — full stop. If doing so hurts the bankers, that’s O.K. ... More than that, reform actually should hurt the bankers."

I agree. But what's worse is what the proposed legislation isn't going to do.

Les Leopold, author of The Looting of America: How Wall Street's Game of Fantasy Finance Destroyed Our Jobs, Pensions, and Prosperity—and What We Can Do About It, offers some insight. In this Huffington Post piece, he lists six things we need to watch out for. 

1. TOO BIG TO FAIL CONTINUES: Too Big to Fail (or is that Too Big to Care?) financial institutions will not be broken up.

2. BETTING WITH YOUR MONEY CONTINUES: Speculating with bank - and FDIC backed - money will not stop as long as there is no separation between commercial and investment banks.

3. TOOTH FAIRY BETTING CONTINUES: Fantasy finance products, like CDOs & CDSs, will continue to be traded with few, or very weak, oversights.

4. CEO / EXECUTIVE'S BONUSES CONTINUE: Obscene executive compensation will continue because there are no provisions for reining in or taxing unearned bonuses, especially in the trade and "capital gains" area. So guess which kind of economic transactions will continue?

5. CONSUMER PROTECTIONS BURIED: The idea that the Federal Reserve is supposed to become the new protector of consumers is ridiculous. The Fed didn't say a peep about banks ripping off each other and state pension funds with fantasy bets. What makes anyone think they're going to watch out for consumers now? This kind of thinking is akin to a church placing Charlie Manson in charge of Bible & Family Values Night. This one's still being discussed.

6. THE JOBS MIRAGE: The notion that creating wealth (for a few) will eventually lead to jobs should have died when Ronald Reagan left office. It should have had a stake put through it's black heart when George W. Bush left. Still, people in Washington want to believe that if we let Wall Street steal and manke money as their "free marketeers" see fit that jobs will miraculously appear. What a bunch of idiots.

 There's more. But you get the picture. It's not good.

- Mark