Wednesday, July 28, 2010

Bill Black is back ...pointing out that Obama has retained all of the nonfeasant, misfeasant, and malfeasant financial regulators appointed by Bush.

PAUL JAY, SENIOR EDITOR, TRNN: "...the way the [finance reform] bill is established, everything depends so much on regulators. And given how powerful Wall Street is in lobbying and appointing regulators, [with lax regulators] you wind up with very little in this bill. Am I reading it correctly?"

WILLIAM K. BLACK, ASSOC. PROF. ECONOMICS AND LAW, UMKC: "You end up with nothing. Indeed, you end up with, potentially, two very bad things. One, you end up with complacency. After all, everybody said this is going to prevent all future crises, so we don't have to worry about future crises. The second thing that you end up [with] is that there are actually provisions in the bill which make the world worse."
"But your question also raises the more fundamental point. If Obama and his economic team really wanted to regulate banks more intensively, well, you know, we're a long way into the administration at this point."
"Obama left in charge the absolutely disastrous leader who was supposed to regulate Fannie and Freddie, a guy who, by the way, had been a personal friend of Bush for 40 years..."
"[The Obama administration] left the worst regulator in the history of the Office of the Comptroller of Currency. This is a guy that not only didn't protect us from frauds; he ran a holy war against state regulators who tried to crack down on predatory lending—it's called 'preemption'."
"If the Obama administration really wanted to regulate, to protect us, it had ample authority under the existing laws, without any passage, to revolutionize the protection. And instead... they have [Lawrence] Summers and [Timothy] Geithner, who are lifelong opponents of effective regulation, running their economic policies."

JAY: "...Should people simply be demanding some kind of public alternative for credit and for financing?"

BLACK: "Yes, they should. But the broader logic also applies, and that was you've got to change the incentive structures. If you leave the private insurers in place, the incentive structure is inherently anti-public."
"So, yes, we have to change the fundamental incentive structures. And, again, this bill, the dominant fact about it is it doesn't even examine, much less attempt to fix, the perverse incentives that are causing not just this crisis [but also those in Britain, Spain, Greece, Latvia, and Iceland, who have] all had their own versions of this crisis, not driven by the US crisis, but driven by these perverse incentives that I've talked about and this belief that you didn't need to regulate or supervise."

More at The Real News

Blogger's Note: This is Part 3 of the series begun in my previous post below.

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