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Financial Reform

Washington Declares War on Debit Cards

From National Review:

Sen. Dick Durbin (D., Ill.) is here to help. Grab your debit card and run!

Thanks to the latest kindness from the Senate’s No. 2 Democrat, many of America’s 185 million debit-card owners soon will endure new fees and lose existing benefits. Other consumers can kiss their free checking accounts goodbye. Durbin’s bright idea even could shutter some banks.

Thank you, Dick!

Banks currently earn 1.14 percent fees, on average, to process debit-card purchases. Imagine that someone buys a new HDTV with a debit card. Citibank wires $1,000 from its ledger into K-Mart’s coffers, and charges K-Mart $11.40 for that service.

In his unbridled brilliance, Durbin decided to fix this. Under his amendment to last year’s 2,319-page Dodd-Frank financial-regulation juggernaut, the Federal Reserve decreed a Cuban-style price control. Come summer, banks must charge 12 cents per transaction, regardless of size or risk. So, when someone puts a $1,000 HDTV on a debit card, Citibank will earn 12 cents for the same service. That’s an $11.28 (99.98 percent) loss from Citibank’s income before Durbin stomped into this picture.

U.S. banks, which expect to lose some $12 billion in debit-card swipes annually, are not just sitting there.

“What do we do to offset the loss of revenue?” Wells Fargo CEO John Stumpf asked colleagues in London on Monday. “Unfortunately, the consumer will pay.” According to The American Banker, Wells Fargo may hike minimum balances, charge money for debit cards, and dump free checking so that it can recoup some $1.3 billion in losses stemming from Durbin’s needless meddling.

“After July 12, 2011,” read a letter I recently opened, “you no longer will earn miles when you use your Chase United Mileage Plus Debit Card.” By relentlessly using my debit card, I usually score at least one 25,000-mile ticket on United Airlines annually. Now, due to Durbin, millions of peace-loving debit-card holders will join me in paying perhaps $500 for previously free cross-country flights. With politicians like these, who needs pickpockets?

Read the rest at National Review.

The Regulatory Tsunami Headed Your Way

From The Heritage Foundation:

When the Dodd-Frank financial-overhaul bill was passed last summer, it was done so with much of the fanfare and self-congratulation that has come to typify Washington. Then-Speaker of the House Nancy Pelosi (D-CA) called it the “toughest set of Wall Street reform in generations.” But the bill’s hype was not backed up with much substance. The legislation, which was sold as a response to the financial crisis, did not even address the problems of Fannie Mae or Freddie Mac and made TARP-style bailouts a permanent fixture of the government’s fiscal policy. And the impact of the law is already being felt as banks have begun to consider new fees on checking accounts and credit cards as a result of this burdensome new law. So much for siding with consumers.

But despite this law’s troublesome aspects, the far more distressing feature of this 2,300 page behemoth is how much we don’t yet know about it. As we noted at the time, the law could more be aptly titled, “The Lawyers and Lobbyists Full Employment Act” as it left a massive amount of its implementation to regulatory agencies which will be bombarded by lobbyists jockeying for special favors.  In an effort to visualize the complexity and amount of unanswered questions left by the law, the US Chamber of Commerce has compiled a list of the “259 mandated rulemakings, another 188 suggested rulemakings, 63 reports, and 59 studies” required by the Dodd-Frank Wall Street “reform” bill into an interactive graphic at the Chamber’s website.

Financial Regulatory Reform: Missing an Obvious Target

From Big Government:

Congress and the Administration have now picked their targets for regulatory reform following the long-inflating credit bubble that finally burst in 2008, the aftermath of which still suppresses economic activity here in America as well as the rest of the world.

Commercial banks, investment banks, financial products, derivatives, etc. . . .all were placed in the crosshairs of the big legislative and regulatory guns in Washington and, perhaps, well they should be. One trophy-size culprit, however, seems nowhere to be found on the target lists of the Congressional or Administration grenadiers. Fannie Mae, that publically traded, congressionally created, private enterprise (GSE or government-sponsored enterprise in beltway speak) seems to have totally escaped the purview of the government blame seekers.  Small wonder.

Of all of the bailouts handed over to private banks, investment firms, automobile companies and insurance companies, none have been more outrageous than the bailouts provided to Fannie Mae and it’s first cousin, Freddie Mac.  Although the government very belatedly seized these GSEs, taxpayer money continues to be provided to these hybrid public‑private creations right under our collective noses each and every day.  The Congressional pontificators have focused attention on every miscreant except the one they (or their predecessors) created and which they continue to feed.

Everyone agrees that the overheated housing market created a pricing bubble that was destined, like the San Andreas Fault or Eyjafjalljokull, the volcanic mountain in Iceland, to experience a major blow-up.

Read the rest at Big Government.

Letter to the Editor — Financial Reform and AARP

Editor’s Note — This letter was sent to local newspapers by Terry Smith.  Although Terry is an officer of Whitley County Patriots, his opinions do not automatically reflect official ‘positions’ of WCP.

Dear Editor:

I encourage all right thinking members of AARP to cancel their membership. 

AARP has embarked on a campaign to encourage people to support Obama’s take over of the American banking system.  It published a full page ad in the Sunday 18 Apr 10 Fort Wayne Journal Gazette and their radio ads can be heard on Fort Wayne’s WOWO radio station.

These ads are misleading in that they blame the banking industry for the massive bank bailout.   This can not be further from the truth.  The crash of the housing market was directly caused by federal laws and regulations.

The Community Development Act of 1977 was a Jimmy Carter law.  The Clinton’s Justice Department demanded that banks make housing loans regardless of lender qualification.  The Bush administration on nine occasions asked Congress to change these  lending laws but these efforts were thwarted by the ethically challenged Chris Dodd and Charles Rangel.

The derivatives that AARP blames on investment companies were the products of Fannie Mae and Freddie Mac, both of which are creatures of Congress.  At the end of the Clinton administration, his people moved to Fannie Mae and Freddie Mac and were paid Million dollar salaries and huge bonuses for creating the housing mortgage derivative market for all of the subprime housing mortgages they purchased.

The bubble burst and we went through phase 1 of the real estate market bust.  The next wave is the re-defaults by home owners whose mortgages were rewritten after their first default, and a new bubble involving FHA.

Obama’s SEC voted on party lines to sue Goldman Sachs, not for any criminal violation but for civil fraud pertaining to derivatives even though the real perpetrators of the fraud were Clinton’s stooges at Fannie Mae and Freddie Mac.  And any civil penalty rendered against Obama’s supporters  at Goldman Sachs will be paid from bailout money received from their buddy Timmy Geithner.  Its all a sham, its all political, but it all has a purpose.

The purpose of the finance industry takeover bill is not to fix lending practices but to take over the finance industry.  The purpose of the SEC lawsuit is to demonize banks.  The purpose of the AARP ads is to stir up hate.

AARP’s duplicity cannot go unchallenged.  Cancel your membership now!

Signed, Terry L. Smith

The Obama-Dodd-Frank-Everything’s-A-Bank-Bill

From Big Government:

Liberal pundit Michael Kinsley once defined a political gaffe as an instance of a politician accidentally telling the truth. House Financial Services Committee Chairman Barney Frank, D-Mass., recently made a gaffe that fits Kinsley’s definition to a tee.

In a debate with Ralph Nader on MSNBC’s “The Ed Show,” in which Nader was accusing Frank of being too timid on the financial regulation bill then moving through the House, Frank responded, “We are trying in every front to increase the role of government in the regulatory area.”  Conservative blogs took note of Frank’s use of the word “every front”, as did Rep. Paul Ryan (R-Wis.), and earned a brusque “tsk- tsk” from The New Republic’s Jonathan Chait.

This is an example of “the conservative misinformation feedback loop in action,” Chait exclaimed. Frank was only talking about banking, Chait claimed, and “not confessing to a plan to expand government in every area.”

Actually, in prefacing his comments, Frank moved the topic from Nader’s point about derivatives to the broader issue of how “the right wing took control of government and ruined it” and how it is supposedly benefitting from its “own incompetence.”  But if one still doesn’t want to take this as Frank’s confession of wanting to increase government intervention “in every front,” one need look no further than the bill by Frank that passed the House in December and Chris Dodd’s Senate “financial reform” bill that Democrats are trying to ram through the Senate.

In the debate, Democrats never tire of accusing Republicans of siding with “Wall Street banks.”  But last week Republicans made headway when Senate Minority Leader Mitch McConnell pointed out that the bill $50 billion resolution fund would institutionalize bailouts for big banks, whether these banks failed themselves or acted as creditors to too-big-to-fail institutions.  Even an editorial in the Washington Post stated that “Mr. McConnell is partly right” and that “creditors might fund systemically important firms on artificially advantageous terms, thus enabling them to grow bigger and riskier.”

 But the same editorial wrongly asserted, as many have, that “Wall Street would provide the $50 billion fund” entirely. Putting aside the fact that taxes on any firms are always passed on to some extent throughout the economy, the fees for this fund would come from the broad category of “financial institutions” defined by the Dodd bill.

Read the rest at Big Government.

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