The Allure of Outsourcing Financial Regulation
Courtesy of Jesse’s Café Américain
One has to be fascinated with the proposal by the Obama Administration to effectively outsource the regulation of US markets and the protection of consumers to the Federal Reserve, an agency that is owned by the industry which it would be asked to regulate.
It is especially interesting given the recent history of the failure of that organization to do its job properly, failure to engage in open and transparent dialogue about its non-core (non-monetary) operations, and continuing resistance to taking direction from the government in matters related to fiscal and legislative policy that would fall under its regulatory purview while asserting its independence.
Its almost surreal. I cannot believe anyone is taking this proposal seriously.
There are three reasons why the Obama Administration is proposing it and the Congress is giving it serious consideration.
1. The special interests, the banks, who are significant donors to the Democratic and Republican parties would like to have it since they effectively own the Fed, and Wall Street likes no regulation better than self-regulation.
2. Government enjoys outsourcing its responsibilities to outside agencies like the Fed, because when the lapses and failures come, it gives them a great opportunity for finger pointing and hearings to chastise the party that failed, and shift the blame for the responsibility for the failure from themselves to someone outside their organization.
3. Larry Summers wants to be both the chairman of the Federal Reserve and of the SEC and a proposed Financial Consumer Protection Agency to attempt to maximize his ability to manipulate and control the financial system. And Larry does not work for you or your interests.
Would you like to have seen Alan Greenspan as not only the chairman of the Federal Reserve, but also the head of the SEC and the Consumer Protection Agency for financial products?
What is being proposed amounts to a financial Star Chamber. It makes the machinations behind the founding of the Federal Reserve in 1913 look tame by comparison.
Has the US a shred of common sense and regard for democratic principles left?
Photo: U.S. President Barack Obama (right) "meets" with speechwriter Cody Keenan, who dressed as a pirate for an Oval Office photo taken for use in the President’s humorous speech to the White House Correspondents Association dinner May 9, 2009. "But as I said during the campaign, we can’t just talk to our friends. As hard as it is, we also have to talk to our enemies, and I’ve begun to do exactly that," the President said in his speech. (Official White House Photo by Pete Souza.)
