With various polls showing that Americans are not buying what Obama and his liberal allies are selling I don’t know how this guy keeps getting his way. He just managed to get a finance called the Dodd-Frank Wall Street Reform and Consumer Protection Act passed with three sellouts from the Republican Party in the form of Scott Brown (MA) and Susan Collins and Olympia Snowe both of Maine. Do they value their party and fiscal responsibility at all? I am sure Brown knows he won’t be re-elected. He simply won so Obama would know Massachusetts did not want Obamacare yet he chose to force it on America anyway. This bill is nowhere near as controversial and even though I personally do not agree with a large part of it, America by and large seems to favor parts of it. I can live with that. Unfortunately most Americans do not realize the damage this bill could do to the average person, many of whom make up the key base of the Democrats Also as much as there is a backlash against big government I think people deep down don’t want more and more government red tape, but some regulation.
As I said the bill does lots of things and is the most sweeping legislation since the Great Depression (not waking up and realizing Obama is president but the period in the early 20th century were stocks crashed).
The first thing the law does is deal with the problem of government bail outs that angered so many Americans. Basically what the law says is that it can pre-emptive take over any bank that is deemed to big to fail. I did not see it in the legislation, but many have argued that bailouts can still occur under this law. While I agree about company not throwing us into financial decay I think the government being able to take over a private business borders on dictatorship that Furher Obama wants. I also understand that the law does allow exceptions for minority owned businesses and that comes as no surprise. There was a charge from the right that it shields Muslim owned banks. I don’t like the majority of the polices of Obama, but I think that might just be a stretch of the truth that the law shields Muslims. Further if they do liquidate a bank and can’t cover its bills with the liquidation other companies who did what they were supposed to would be forced to cover the loss. That is another dictatorship policy. So if I run a company and do my job and some losers can’t run their company I get penalized? Do you think the average bank won’t pass on those fees somhow? If you do there is a village someplace looking for you just like there is a village in Kenya looking for Obama. Further the law will take back pay from senior executives for the two years prior to the failure and the federal government has the authority to ban said executives from working in the financial services industry if found to be responsible for the bank’s failure. I am not a fan of the rich fat cat banker, but this is completely against the system of capitalism. Anyone who knows anything about business knows that you need to take risks to make a profit. This will make people scared to do anything that potentially could be a good idea. If this had been in place before home equity loans, which helped many people, probably never would have been thought of. This one really goes beyond the power the federal government should have being able to tell someone that they can’t make a livelihood. Not every failure is an executive’s fault and intentionally. Sometimes it could be a case of mass delinquency because of the economy.
The law also seeks to control interchange fees. In case you are not aware interchange fees are what banks or companies like Visa, MasterCard, Discover, and AMEX charge merchants for using their service. These charges are not directly charged to the customer, but many businesses do factor that into their prices. Prior to this law it was against credit card company polices to require a minimum purchase for a credit card but many businesses did it anyway and interchange is why. What the government wants to do is cap how much the banks can charge merchants for accepting a credit card. Fees vary but run in the 2% range. This is part of banks bottom line. That is how they make money on customers who never pay finance charges. This might lead to more and more annual fees on cards that now don’t have them. Now I am all for helping a business, but if the savings are not going to be passed onto the customer then all the customer will get are creative fees from the companies to remake the money they are losing on interchange under the new law. This is clear case of the government meddling in private business, but they do have the right under the Commerce clause. Liberals love the Constitution when it suits their agenda.
Some of the biggest changes are in the mortgage industry which in part cause a good bit of this mess. Now there are no more no document loans that were often called “liars loans”. These were basically loans were people could just state what they made and get a loan if they had very good credit. People did these many times on investment properties, but many did it to qualify for a more expensive house than they could afford. Now when I was doing mortgage underwriting I had seen many documents people sent in. Many self employed people have tax returns that almost look like they make no money because of all the things that they right off. Mortgages usually look at your adjusted gross income or you taxable income instead of your gross income. This being the case many self employed borrowers would not be able to get mortgages. Many of them are hard working people who are going to be harmed by this. Also let’s say someone sells a little on eBay or at flea markets during the weekend or maybe plays in a band. They might make $5,000 a year doing this. They should claim it on their taxes but most people don’t and wont. Before that would have been able to qualify someone now if it is not claimed it can’t be used. Most lenders also want any income used to be something that a person has been receiving for at least two years. You might have just got a new job that increases your income by $10,000 but since it’s a new job with a separate company many lenders won’t let you use it. This was required when I was underwriting during the period that much of this happened and yes I told management the loans were junk and was told to do my job and approve what I can. Now it will be even harder and many lower middle class and poor people will be affected. Many banks will require larger minimum payments and be much stricter in lending. The days of no money down are probably very much over. In this country minorities make up a bit base for the democrats yet this will hurt the very people who put Obama in the house formerly known as the White House. Crazy loans like negative amortization loans (it would take to long here. Look it up. They really are junk and are a big part of why the meltdown happened. My bank did not offer these for that reason) or many of the sub-prime lenders, for people with bad credit, who lent money to people who honestly would not have a prayer of getting a house without it. Now I don’t think the average person will be able to get a house. A poor working single mother with two kids in the ghetto will probably have no chance now. Yet she most likely will still blindly follow Obama. On the plus side I will say this law does have some merit. For one thing illegal invaders in our country will probably have zero luck getting loans with this unless Obama exempts them, which would be no surprise. It also does keep people from getting into loans they really can’t afford, but it neglects to rein in Freddie Mac and Fannie Mae and should have since they helped cause a good bit of the mess in the housing market. It was also liberals who pushed for the loosening of regulations that led to many of these problems because there was not enough “diversity” in people getting mortgages. In other words there were not enough minorities getting them. This came when Clinton was in charge. The bill also bans most prepayment penalties charged for paying mortgages off early. I can see that this seems to bit a bit predatory, but in reality there are many people who would stand no chance of getting credit for a mortgage and since there is more risk from the customer the company needs to make more money. Prepayment penalties are one way that the banks can make money.
One measure that caused a lot of controversy was how to regulate derivatives, futures and commodities trading. This is also something that had a huge bearing on the financial meltdown. Without going into a dissertation on the commodities market, here are some basics. Products like oil, gas, cotton, cattle, and gold are all commodities. What occurs is that people will speculate that the prices of a certain commodity will go up or down in the future and make an order to buy said commodity for a certain price in the future. The more people buy the higher prices can go. There was a thought that when oil got to be $145 per barrel and gas was $4 per gallon many people believed it was not the simple result of supply and demand between the producers and consumers of oil and gas. It was argued by people in many industries including the airline industry that the prices going out of whack was directly because of speculation. People can still speculate pretty much the way business has always been done, but it will be something that companies will need to be more transparent about and hedge funds will have to be much more transparent. I don’t think this is a huge issue, but the reality is that it is just yet another power grab by the government.
The law also deals with how financial advisors deal with their clients. Obviously advisors are supposed to work in the best interests of their clients, but this is not always the case. They do need to make a dollar though and sometimes their decisions were based on commissions rather than the best interest of the customer. As an example, I can tell you for a fact that in the mortgage industry many people sold what put more commission in their pocket than what was good for the customer. There were customers that should have gotten 5% mortgages that were financially illiterate that were put into 9% loans that paid more commission. My company (with my help) caught many of those, but some did sneak through. Previously financial advisors just were held to a fiduciary standard. This basically meant they could sell whatever they wanted to who they wanted as long as it met some very basic criteria. One was that it fits the customers goals and risk tolerance. If it did there was not an issue. The problem was many brokers would recommend or sell what paid a higher commission. If a customer is looking for a mutual fund their may have been one with very minimal fees to the customer, but the broker could sell them one that charged lots of fees and put money from the customer’s pocket to the broker’s pocket. This was ok as long as it fit the customer’s goals and risk tolerance. Now the broker can be held accountable for things like that. They have to pick what is best for the customer’s interest. Personally I don’t see how they will enforce this, but I do believe it is a good idea. The problem then because that every broker will have to do even work for the same money to insure they know the prices of all the products being sold.
As if government is not big enough the liberals found another power play and put a Consumer Financial Protection Bureau was needed in addition to all the other red tape. The is basically going to be an agency that can regulate anything from huge banks to the local mom and pop pawn shop. Car dealers were exempted from their oversight after they mentioned that it could mean they can’t finance people because of the extra requirements. I guess none of the liberals ever heard President Calvin Coolidge when he said “The business of America is business”.
To be fair there are some good things in the law. There is going to be some things set up through the SEC to insure consumers have financial literacy available and things are more understandable for the average person. Much more disclosure is going to be now required for individual retail investors. You also can get a free look at not only your credit report once per year, but you can get the FICO score if you had adverse action taken against you like having a rate raised or being denied credit.
I have not been able to get all of the details, but it should come as no surprise that this law is rotten with unearned quotas and requirements for minorities and women. What is wrong with working, earning and then getting? I guess liberals just feel people should be handed anything. There is no doubt in my mind that any loser that wants something for nothing voted for Obama.
This bill as traditional for liberals goes way too far. It does have good things in it, just like the Healthcare bill, but instead of letting some good things roll they want to hang the moon and will probably cost lots of problems. These include many problems for small businesses and consumers like obtaining credit. Consumers will have a harder time getting mortgages. I have worked in that industry and know that lots of people will be affected by this that is not an intended consequence. Another thing is that Obama continues to blame everything on Bush. Not only is this being done much more than by any previous modern administration, but the public finally is not buying it. If he did not want the job he should not have ran for the office. The reality is he was not ready to lead and got elected because people were hung up on the first non-white president. The fact that the Republicans really did not have a good choice also did not help. Also people forget that many liberals pushed for relaxed lending so people who normally would not be able to own homes (think minorities who happen to be a big base of the democrats) and the reality is that is not the fault of George Bush. It is a fact that Bush and John McCain prior to running for President wanted to rein this in but could not get any help from the liberals.
MSN reader Rocky said it best here
“That’s funny, the Dodd-Frank Financial reform bill. Talk about an oxymoron, two people that helped to create this financial mess by pushing for easy credit and easy mortgages for all, low income and those who could never pay for a mortgage. They along with Obama’s ACORN (when he was their lawyer – hence community organizer) protested at Banks to give easy credit for loans. McCain told them a few years back (when the dems had control of Congress) this Financial disaster was about to happen and they ignored him. McCain was explicitly talking about Fanny Mae and Freddie Mac as a possible big problem at the time and they chose to do nothing. For political agendas we Americans are getting the shaft and have been, when they screw up they they make a band-aid bill with there name on it to make it look like they are the one’s fixing it, when they are the one’s that created the problem. They didn’t even include Freddie Mac and Fannie Mae in this bill as they will probably push for easy mortgage loans from them for the millions of immigrants they want to give amnesty to.”
The more Obama monkeys around with the country the more I wonder what some historical figures might possible think. Here are some thoughts of two former Presidents would most likely say if they could be transported into modern times and see what has happened to this great country.
George Washington “We rebelled for this?” “Daddy, I really think we should grow our own tobacco and let southerners pick their own cotton”.
Abraham Lincoln “I set who free”
Thank you for reading
God Bless you and God Bless America
Sources and for further reading.
http://www.youtube.com/watch?v=ivmL-lXNy64 affirmative action which led to mortgage crisis
http://www.youtube.com/watch?v=P36x8rTb3jI how on earth is this lady allowed to vote. People like this create racism.