Do the Tea Party folks THINK? I have my doubts.

These Tea Party-types leave me scratching my head.  Can they really be as simple minded and gullible as they seem?  They're educated idiots.  Case in point:  

They say they want less government.  They say they don't want the government bailing out failing businesses.  Government bailouts = deficit spending.  Deficit spending = BAD.  They say, "Let 'em go broke!  Survival of the fittest." Fair enough.

So federal financial regulators finally got the Volcker Rule passed.  This rule prohibits banks from taking depositors money and investing it (gambling with it) in certain high risk ventures.  They've been doing this for years, much to their advantage.  Usually.  If all goes well, the bank's shareholders (NOT the depositors) make HUGE profits, and the bankers individually get HUGE bonuses.

But if things go badly, such as what happened back in 2008, they simply run to Congress asking for a few hundred billion (with a B) dollars or they say they'll close their doors and take the economy down with them.  

If things go well, THEY win.  If thing DON'T go well, THEY don't lose, the TAXPAYERS do.  Sweet deal, huh?

The Volcker rule is good.  It reduces the likelihood the banks will ever need a taxpayer bailout.  The bankers, of course, don't like it because in gets into THEIR pockets.  They were quite happy with things the way they were.

Give a guy a suit and a haircut and some little tiny glasses....

Enter The Honorable Gentleman *snicker* and Tea Party darling, Congressman Jeb Hensarling (R-TX).  He's the Chairman of the House Financial Services Committee, the folks that oversee the banks.  He will soon be proposing a new bill that will open up a HUGE loophole in the Volcker Rule, essentially allowing the banks to go back to doing business much like they used to.

Let's review: 

The Tea Party does NOT want to bail out failing businesses, including (presumably) banks.

The Volcker Rule makes banks act more prudently.

The Tea Party LOVES Jeb Hensarling.

Jeb Hensarling wants to open loopholes in the Volcker Rule that will allow banks to gamble again, increasing the odds banks will some day need another taxpayer bailout.

Does this make any sense?

I wonder how much the banks "donated" to Mr. Hensarling?  Wonder how many of his friends and relatives and supporters have received "sweetheart" deals, or maybe employment, from the banks?  (There are lots of ways to reward friends.)

How many times do I have to write about this?  Vote the bums out.  Or send really mean emails, or riot, your choice.  ;)  

S

A lump of coal in their Christmas stocking

Playing nice is vastly overrated.  For the last week my posts have been about past Christmas presents, dogs, icy weather, and other fluff.  But now I feel the need to stir the pot.  (Most of you can go back to sleep. I'll be back tomorrow with more fluff stuff.)

You all know I have a serious hard....umm....problem with the major banks.  Ever since bank deregulation back in the 1990's their focus has increasingly turned to pulling in as many deposits as possible, then "investing" that pot of money to make themselves a hefty profit.  Sure, they still make some loans, but if they have a chance to make trades for their benefit (in hedge funds, packaging/selling derivatives, etc) vs making a loan, well, borrowers are just SOL.

It's sort of like a spoiled rich kid going to Vegas with daddy's credit card.  As long as he's winning, it's "party like there's no tomorrow!"  But if his luck runs out and the "knuckle draggers" come looking for him, then he's back at daddy's door wanting a bailout.

For a decade the banks were on a hot streak, making billions and paying themselves handsomely.  But in '08 it all hit the fan and they came knocking (desperately banging?) at the taxpayer's door, wanting a bailout.  This led to the passage of the Dodd-Frank (banking reforms) Act*.  It's taken 5 years, but it looks like we're finally going to see the bankers get a solid spanking.

The five major financial regulators (FDIC, Federal Reserve, Securities & Exchange Com, Commodities Futures Trading Com, and the Comptroller of the Currency) will tomorrow vote on the "Volcker Rule" which will prohibit banks from trading for their own gain (known as "proprietary trading") and limit their investment in hedge funds.  If the regulators stick to their guns this will curb bank risk-taking and avert future Wall Street taxpayer bailouts.

Bankers of course don't like this at all because it will hurt their bottom line and make a big dent in their HUGE bonuses.  Collectively they have hundreds (thousands?) of lawyers and lobbyists scrambling right now to try and devise ways to fight the Volcker rule, or at least get some loopholes inserted that will allow them to get back to business as usual. 

I'm hoping the regulators won't knuckle under to the special interests who would throw us all under the bus if they could make a buck for themselves in the process.

Heehee....I love watching bankers squirm and squeal.  :)

S

*  Ironically named after Sen. Chris Dodd and Rep. Barney Frank, two of the bankers most proficient enablers during their go-go years.

Time to "put up or shut up"

As you know I'm no friend of the big banks.  They have systematically and, through their intensive lobbying, legally raped and pillaged America.  Some would say the entire world.  Now our illustrious congress is debating whether to include/enforce "The Volcker Rule" as part of our banking "reforms".  Those reforms have been watered down so much already they're of dubious value, but still I suppose they're better than no reforms as all.


The Volcker Rule would prevent banks from "proprietary trading", which means taking their money and betting it on highly risky trades.  "But if it's their money, why should we care" you ask?  Because they can't lose.  Only we taxpayers can lose.  If they gamble big and win, they make mega-billions of dollars, meaning huge profits and BIG bonuses for their top executives.  But if they gamble big and lose, like they all did back in 2008, they know the US Government....you and I....will step in and make good their losses.  (They'll just have to be more discreet when they pass out their bonuses.)


They know they're "too big to fail"....if they lose everything and go out of business they'll take the whole country with them.  They know we won't let that happen.  It would be like you and I partying in Vegas with daddy's money.  As long as somebody is behind us to cover our losses, why hold back?  That's what they call "moral hazard".


The banks have already successfully beat back a proposal to break them up into smaller parts.  Under this scenario if their freestanding proprietary trading company failed it would just be allowed to go bankrupt.  It wouldn't hurt the bank's depositors (as they would be in a separate freestanding company) and the FDIC / U S Treasury wouldn't be out anything.  Just the proprietary trading company's investors would lose.  They do NOT like that idea!  They would lose their Sugar Daddy, aka Uncle Sam.


The time allowed for the banks to plead their case why they should continue to be allowed to gamble wildly has passed.  It's time for congress to decide.  Are they going to cave....again....to the banks and agree to cover their losses with our taxpayer money, or will they introduce some prudence to the banking biz?  My guess?  Bend over, America.


Will it do any good to write your Congressman and Senators and express your opinion?  Only if you attach a check for about $100,000 with your letter.  Those seem to be the only letters they read.


S