The recent passage of health care legislation has opened up the door for ‘reform” of the financial industry. Once again, the Obama administration is adamant in impressing its ideology on the banking industry. Like it ‘punished” the evil insurance companies with billions of dollars in subsidies, the bankers and big CEOs will surely be incensed by their own version of punishment and vilification. Knowing that ‘reform” will severely inhibit competition and grant a cartel over the entire industry will surely make those at Goldman Sachs irate.

Deceptive wording and tactics once again reign supreme as they did in the health care bill. While many in Congress admonish those on Wall Street, the proposed legislation cries of the age-old unholy alliance of Baptists and bootleggers.

The bill only really attacks what Obama and the Democrats condemn as the evil practices of the banks on the surface. It does create a ‘consumer watchdog,” the Consumer Financial Protection Agency to monitor the practices of financial firms. Yet these are the same government bureaucrats, mind you, who let Bernie Madoff operate unencumbered for decades despite numerous warnings. On the other side of the ‘battle” are the numerous banking firms who are coming out in opposition to the bill. What certainly comes to mind is the Goldman Sachs CEO Lloyd Blankfein pleading passionately in front of a congressional hearing not to be regulated. In truth, once you break through the faade that is this battle over regulation, both sides have much to gain and much to gain from making it appear this way in the first place.

It is no wonder then when you read through some of the proposed legislation that it seems like Congress is in fact protecting the banking industry from competition. Senator Dodd’s version of the bill would require start-ups raising funding to register with the Securities and Exchange Commission and then wait 120 days for the SEC to review their filing. A second provision raises the wealth requirements for an ‘accredited investor” who can invest in start-ups if the bill passes, investors would need assets of more than $2.3 million (up from $1 million) or income of more than $450,000 (up from $250,000). The third restriction removes the federal pre-emption allowing angel and venture financing in the United States to follow federal regulations, rather than face different rules between states. This in no way protects consumers. Instead, it severely restricts any competition from entering the market against the already existing firms. Rather than punishing the evil banks and investment houses like the myriad of sound bites and news clips suggest, they are actually rewarding them with extra profits and a powerful monopoly over the entire system.

There are also more nefarious elements at work inside the bill, as its ambiguous language may well expand the scope of the government’s regulatory powers out of the financial industry and into ordinary transactions. The bill makes mention of transactions within Wall Street and within financial firms but includes ‘financial-like” transactions in general. This can be construed to any kind of exchange regardless of industry or scope. It can be seen quite clearly that this is in no way a battle over financial reform but rather a generous quid pro quo money and profit in return for power and control.
Thus the political implications potentially and dangerously reach far beyond the scope of what has been billed financial reform.

Yet we can’t simply blame this on the greed of politicians or the bankers. Greed, whether you can stomach it or not, is a constant in this world. The issue is a system in which greed can be masked as ‘well-intentioned” policies, where those in power can make deals and rewrite the rules for their friends, and can then go straight back and blame it on a ghostly ‘free market” which simply does not exist.

Economists cannot even begin to understand the complexities of our modern economy and how it ‘failed” in 2008, nor can they agree on fixing it or even if imposing a solution will solve our economy’s problems. Then why do we not question politicians (believe it or not, they aren’t saints) when they say that they have and will force upon us both a supposed cause and its solution?

Lipstein is a member of
the class of 2013.



An open letter to all members of any university community

I strongly oppose the proposed divestment resolution. This resolution is nothing more than another ugly manifestation of antisemitism at the University.

The Clothesline Project gives a voice to the unheard

The Clothesline Project was started in 1990 when founder Carol Chichetto hung a clothesline with 31 shirts designed by survivors of domestic abuse, rape, and childhood sexual assault.

Israeli-Palestinian conflict reporting disclosures

The Campus Times is a club student newspaper with a small reporting staff at a small, private University. We are…