The Truth Concerning the Dodd Bill

Rather than post the following info as a newsbite, I'm giving it it's own thread.

The House Republican Study Committee offers a suggestion for anyone who naively believes Senator Chris Dodd’s Obama supported financial "reform" legislation won’t make bailouts and too-big-to-fail a permanent part of our now very political economy.

Read the bill.

Hey... it's only 1,336 pages, kids...

Here’s how it works in layman’s terms:

Step 1 – Washington bureaucrats decide that a financial institution poses a “systemic risk” (i.e. it’s too-big-to-fail). The stock and bond markets will see this and conclude that these institutions are safer investments than other, smaller firms because the government is essentially promising it will step in should the balance sheets in question turn toxic. Firms that are too-big-to-fail become even bigger.

Step 2 – These anointed institutions are required to send $50 billion, which will ultimately come from higher rates and fees paid by consumers, into a permanent, new bailout fund.

Step 3 – Inevitably, the market distortions and incentives caused by the too-big-to-fail syndrome described in Step 1 enable these bigger-than-ever firms to take reckless risks that turn their balance sheets into toxic sludge.

Step 4 – The $50 billion taken out of consumers’ pockets gets distributed to the failed firms’ investors according to the whim of Washington bureaucrats and other politically interested parties.

This is a bailout, and this is reality under the Dodd bill.

The Dodd bill codifies the “back door” bailouts used by the Federal Reserve to pump money into Bear Stearns, AIG, Fannie Mae, and Freddie Mac.

Democrats claim the Fed would have to distribute this money through broad programs rather than to specific firms, but the reality is more complicated. Just like the backroom deals in ObamaCare, the Fed could structure the supposedly broad programs with so many caveats and requirements that only one targeted firm would ever actually be eligible for the money.

THINK CORNHUSKER KICKBACK - ONLY INSTEAD OF FEDERAL LARGESS DIRECTED TO A CERTAIN STATE IN ORDER TO BUY THE LOYALTY OF A CERTAIN SENATOR DOLLARS ARE DIRECTED TOWARDS "FRIENDS OF THE ADMINISTRATION" IN THE PRIVATE SECTOR.

OH... AND I WROTE "THE ADMINISTRATION" AS OPPOSED TO "OBAMA'S ADMINISTRATION' DELIBERATELY. WHETHER YOU HAVE DEMOCRATS OR REPUBLICANS IN CHARGE THE DANGERS REMAIN THE SAME! THIS BILL IS A RECIPE FOR CORRUPTION REGARDLESS OF WHICH PARTY CONTROLS THE BAILOUT SPIGOT AT ANY FUTURE POINT IN TIME.

As happened with AIG, Washington could also force taxpayers to book huge losses while a failed firm’s creditors and counterparties recoup far more of their investments (potentially 100%) than they would get in normal bankruptcy proceedings.

The FDIC would be able to guarantee a failing firm’s debt obligations without limitation and without approval from Congress. The Secretary of the Treasury, meanwhile, is authorized to purchase this debt (again without limit). Since there is no requirement that a firm bailed out in this manner be dismantled, taxpayers could be forced to prop up favored zombie banks for as long as Washington finds it politically expedient.

FOLKS... PLEASE... PAY FRIGG'N ATTENTION...!!! DON'T LET THESE BASTARDS ACCRUE EVEN MORE POWER TO SCREW US AT WILL...