I tried to sidestep this and not let this get to me, but it has to be said. The financial regulation bill, that just passed scares the shit out of me and is in my opinion, the worst thing that can happen in these troubling times. This monster piece of legislation weighs in at a staggering 2,300 pages and gives the government new powers to break up teetering companies, that if allowed to fail, would threaten the economy, creates a new agency to protect consumers in their financial transactions, and shadow financial markets.
Who decides what is to big to fail? You can argue that any company, if allowed to fail, could threaten the economy; ranging from the little mom and pop store on the corner to the biggest of corporations. What defines a threat to the economy? It is also stated that a failing institution would be liquidated and the costs assessed on their surviving peers. If the industry is responsible for those who fail are they allowed to create their own "club"? Shouldn't then financial institutions be allowed to say if and when a bank can open? The Federal Reserve is granted new powers, while coming under expanded congressional oversight. It is like the blind leading the blind. There has to be some level of independence and accountability here ladies in gentlemen. Not only on the part of the financial instituions, but also on the part of the government.
The financial collapse that happened back in 2008 is as much to blame on the government's lack of oversight in the first place as it was to the greedy investors on Wall Street. I will even go as far as to argue that this financial collapse is the fault of all people who inhabit this earth. The developed countries of this world lived for years on a bubble, and all bubbles pop. We were spending way beyond our means using credit as an equivalent to cash, buying overpriced houses that were way beyond what we should have been buying, and succoming to the greed of the almighty dollar. Just like the .com boom back in the late 90s it popped and the fallout was immense. I am not preaching that I am not guilty of this, as I am far from it, but I know that is my problem and do not expect anyone to assist me.
The financial industry is one of, if not the most, regulated industries in the United States. Oversight existed prior to the collapse and was meant to monitor the market and detect potential problems. Where was this and I guess adding more will make it better? It is almost being frowned upon for people to want to make money. Interest rates are at a low and the only way to get a worthwhile return for your money is through investing. If you follow the market at all you know that it has it's ups and downs, some companies do well and some companies do bad. Hedging, which is at the root of the evil, is a way to counteract this and protect your investment from the cyclical nature of the market. The problem lies in that some companies hedge against their own consumers. For example, a mortgage company can issue a mortgage to an individual knowing that that individual cannot afford that mortgage. This individuals mortgage is placed into what is called a mortgage backed security. The issuing company can then go out and hedge or bet against the individual they already know can't afford their mortgage and make money off of it.
Again I preach change. Real change; not this fake change that is happening through unprecedented legislation. It is up to individuals to make the change in themselves. If I walk into a bank and have an annual salary of $35,000 / year and get approved for a $150,000 mortgage, that should raise a red flag in your mind. There is no possible way you can afford this, hell it is even hard to afford this when you are making double this annual salary. Common sense would tell you that something is wrong and maybe I should think again. Same thing goes for investing. If it seems to good to be true, then it probably is. Using your head and going with human nature's inate insticts can do the world a lot of good. We don't need anyone to sit there and tell us what we should, shouldn't and probably now aren't allowed to do.
This bill pledges "no more" Wall Street bailouts. My question to anyone who reads this is when will we be footing to bill to bailout the government of the United States of America? Where is the consumer protection against this entity? This will not create jobs, this will destory jobs and only create headaches that we can only imagine at this point.
All I can say is welcome the First National Bank of the United States of America. Not only will they be receiving your tax money, but soon they will control all of it. But remember, this bill has you, the consumer, in mind and is protecting you from the evil that lurks. No thank you. Let me take my chances on my own. I am a big boy now, let me make my mistakes, and please don't catch me when I fall.
Do not impose on others what you yourself do not desire.
- Confucius
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