Gutting Dodd-Frank & a private Fannie and Freddie

[TGHusker]

Is this a good thing or not? I'm not an economist so I have yet to form an opinion. I wonder when replace something that was put in place due to a crisis, if we are not in effect setting ourselves back up for a fall again. The deeper the crisis, normally the greater the swing of the pendulum back the other way to correct the crisis. Did Dodd-Frank go to far? My 1st gut check reaction: who will this legislation benefit? Follow the money, or the lobbyists and see if we can find a hidden motive.

 

Repubs would like to gut Dodd-Frank. Like Sarbanes-Oxley before it, many repubs see D-F as an over reaction and overly cumbersome law.

Both acts were initiated after a deep financial crises hit our economy.

 

Within the proposed legislation, Congress would return bank insolvency/ bankruptcy action back to the bankruptcy courts.

They want to also move the Consumer Financial Protection Bureau out from under the Federal Reserve & its budgetary control to Congress' budgetary control

3rd they want to privatize Fannie and Freddie

 

full article:

http://finance.yahoo.com/news/house-republicans-aim-dodd-frank-160833670.html

 

 

A part of the article here:

1.They have said the measure perpetuates government bailouts, and that any collapse of a large firm should be left to a bankruptcy court.

In the past, Republicans were unable to get any traction repealing the measure, largely because the U.S. Senate was controlled by Democrats.

The plan still faces major hurdles, including a likely veto from President Barack Obama if it ever reaches his desk.

Nevertheless, Republicans in the House are making a fresh push targeting bank resolution and other major Dodd-Frank provisions now that the Senate is also controlled by Republicans.

 

2. In addition to targeting resolution powers by banking regulators, the Republican budget plan also takes aim at the Consumer Financial Protection Bureau, a new regulatory agency that serves to protect consumers from predatory loan practices by credit-card and mortgage servicing companies.

The bureau's budget is not appropriated by Congress and is funded through the Federal Reserve. That has irked Republicans because it gives them less control over the regulator.

 

 

3. In addition to targeting the Dodd-Frank law, Tuesday's plan also calls for privatizing housing finance companies Fannie Mae and Freddie Mac, which were both seized by the government in 2008 after they nearly collapsed beneath the weight of bad loans.

[BigRedBuster]

I don't understand the anger at Fannie Mae and Freddie Mac. They have been in place since the 1930s and have worked well.

 

What changed over about a decade prior to the Great Recession was deregulation in the financial system. That was an absolute horrible thing to do and that is what allowed the banks, insurance companies, investment firms, investors and lenders to do what they did that caused the recession.

 

I am not an expert on Dodd Frank. Honestly, with the media we have today, I have no idea how anyone could be without having a full time job actually studying the bill and it's affects. The media isn't going to give you honest information.

 

What I do believe is that after the recession hit, it was clear we needed to put more regulation back into the system. One area that I feel is extremely important but hasn't been done is that it used to be not allowed that banks, insurance companies and investment houses couldn't be all related. That regulation was dropped and now you see investment offices and insurance offices in banks. That simply can and does cause so many problems when one institution falters and brings down others. And, I don't like these huge institutions that are involved in all three facets of finance to be all under one roof.

 

Spit them up and regulate them separately.

 

I am NOT in favor of getting rid of Dodd Frank simply because some talking heads claim it's "evidence of a tyrannical government taking over our lives". I also don't see the need to drastically change Fannie Mae and Freddie Mac.

[TGHusker]

BRB I agee wt you on Fannie and Freddie. They have been around so long, I suspect there is some money changing hands under the table for this to be put forward. As you know, I tend to be 'small' govt conservative but govt has a vital role in serving to protect the small from the big and work for the common good of all. I agree the bigger these 'too big to fail' institutions get, the greater the hidden danger they present to the society as a whole. When a few big institutions can 'corner the market' on banks, investments and insurance - where can the individual go when they fail or when they unfairly control?

[strigori]

The deregulation you are thinking of is the removal of the wall between investment banks and commercial banks. So now the hedge fund types get to gamble with your savings account. What could possibly go wrong? Typically why all these banks got shut down by the FDIC after 2008 was simply that if every bank member decided to remove every penny from the bank, the bank would not be able to do so.

 

And as a rule, if a politician wants to "privatize" something, they probably stand to make a hell of a lot of money if it goes through. And you can count on that whatever gets privatized is now much worse off, and so are the people who were using the entity.

[TGHusker]

The deregulation you are thinking of is the removal of the wall between investment banks and commercial banks. So now the hedge fund types get to gamble with your savings account. What could possibly go wrong? Typically why all these banks got shut down by the FDIC after 2008 was simply that if every bank member decided to remove every penny from the bank, the bank would not be able to do so.

 

And as a rule, if a politician wants to "privatize" something, they probably stand to make a hell of a lot of money if it goes through. And you can count on that whatever gets privatized is now much worse off, and so are the people who were using the entity.

agreed