Government Regulation That Isn’t
The Bank Holding Act of 1956 was referenced in a post on Michelle Malkin’s website prompting some minor research at this blog. While typing this post another news report was heard on the radio announcing the past week’s unemployment figures up 27,000 from the week before and the highest number reported since the recession of 1992. This information and other reports on the condition of financial matters in the US plus looking into the BHA of 1956 and related legislation draws attention to previous actions which may be at least in part responsible for where we are right now.
Some may rightly question who was minding the store all this time for the situation to become so dire? Is it fair to single out individuals for their contribution to the economic, banking and financial problems the country faces now? Only if you can clearly compile a complete list and support it with equally complete and valid evidence. That is a task which may be beyond anyone’s capacity if it is to be presented before this entire mess is nothing more than a historical footnote. But some information will be presented here in hopes that someone will take note and add it to the list of items to review when the time comes to establish real protections to avoid another failure like this in the future. While the possibility of producing adequate protections for this purpose is remote the effort should be attempted.
RIEGLE-NEAL INTERSTATE BANKING AND BRANCHING EFFICIENCY ACT OF 1994 is legislation which amended the Bank Holding Act of 1956. One of the items included in this measure required a Study and Report on the United States Financial System. The Secretary of the Treasury was to chair or designate someone else to chair an Advisory Commission made up of people who were not government employees. Together with input from nine related government entities from the Board of Governors to the Office of Thrift Supervision and HUD, to name three, a report was to be submitted within 15 months of the law being enacted and the group terminated 30 days after giving the report to the President pro tempore and the Speaker of the House.
The very problem facing the country today was what this report was intended to prevent. All manner of financial concerns were to be addressed and steps taken to correct any deficiencies found. The report would circulate sufficiently that all pertinent agencies, departments, groups and individuals responsible for oversight and subsequent action to maintain the health of the country’s financial system would be in the loop.
One would think such a mechanism would have already been in place and that we would still have this type of mechanism operating. The particular one noted above was to be terminated after its initial report. Not unlike following the activities of Congress or any other government entity, the quantity of reports and analysis published present a formidable and time consuming task of retrieval and review. That may be by design or simply the way it works out. The easiest report or analysis of the present situation was of course available from the MSM and two representative links are offered here as examples.
Ahead of the Bell: Financial Services (AP)
The item above cites an analyst’s report on the debts of financial companies and what they believe is required to solve the problem. Mentioning the US financial system has $37 trillion in debt can get your attention and renew the concern that this problem is beyond huge. The analyst calls for more government intervention to promote confidence in the system and return investors to the markets, etc. That comes as no surprise.
Another item linked above is no more surprising than the first one but for other reasons. It seems the article cannot make up its mind whether to hop on the Paulson bashing bandwagon or not. To give the Treasury Secretary applause for not just submitting a plan but moving on it quickly is equivalent to saying do something even if it is wrong. And wrong seems to be the dominant opinion on TARP so far.
Offering the minor research indicated at the top of this post may be as deficient as the efforts employed to date to fix the financial crisis. The Riegle-Neal bill presented in this post demonstrates only one action in a long list of measures related to finance and banking which promoted more options for this sector of the economy that exposed the nation to this crisis. Mention also of the report connected to that legislation indicates everyone in government has the opportunity and responsibility to discharge their duties and successfully respond to potential problems that lead to the very situation we have that the mechanisms were intended to prevent.
All the taxpayer money being offered to those in financial trouble may only serve to delay the inevitable. With no hint of corrections coming from legislators to eliminate their previous actions which allowed the crisis to develop the main problem appears to be two-fold. TARP will not provide the necessary solution to lead the economy and financial system away from further decline and needed corrections in current law will not be delivered in Congress.
It may be all that is happening so far will only delay a further meltdown in which we may hit bottom and then be able at some point to recover through a more natural process. Hold on for a bumpy ride in 2009. As if you didn’t already know it was coming.
Stanford Matthews
MoreWhat.com