You probably heard that the Financial Reform Bill just passed the Senate and is on it’s way to being signed into law by Emp-error Obama, probably some time next week.
“Yes,” you ask, gritting your teeth. “But how, exactly, does it affect me?”
Well, just the fact that it was written by Democratic Senator Chris Dodd, and Massachusetts Representative Barney Frank should have you running, screaming towards the Canadian border. I find the irony rather horrific: one of the chief proponents of Fannie-Mae and Freddie-Mac (the two programs that are chiefly responsible for the economic mess we’re in regards to banking) is one of the architects of the legislation to get us OUT of the trouble he caused. Think about that: If you had to trade your car in because the mechanic at your dealer ruined your engine, would you turn to that same mechanic to write the service manual for your new car?
As to the impact, in some minor areas, we gain, but as is always the case when government gets involved, it’s gonna cost you at the other end… Translation: Break out the KY Jelly, folks. Try to minimize the pain.
The legislation took well over a year to develop, and it wound up taking slightly over 2,300 pages to contain it. But NOT TO WORRY! I’m sure His Sly-ness, the Omnipotent Lord Obama will give us 72 hours to look at it on-line before signing it into law, just like he did with the stimul… uh, woops. Never mind… “Nothing to see here, folks. Just keep moving, please.”
Better yet: If you are into Masochism, download it yourself here and enjoy your week-end: The Dodd-Frank Wall Street Reform and Consumer Protection Act (as a public service announcement, I recommend using a condom while reading it).
If I may, here’s a highly condensed version of some of what you’ll find buried in this legislation:
1.) The legislation creates an agency that can seize and liquidate any bank (including those considered “too big to fail”).
The Good News: We shouldn’t get stuck paying to bail out banks for their failures as George Bush had us do.
The Bad News: It does NOT, however, control just how big a bank can grow. Recipe for disaster? Guess we’ll have to wait to find out. You know, like Nancy Pelosi’s take on health care: “We have to pass it to find out what’s in it!”
The REALLY Bad News: Hello? The government now has permission to seize any bank (and its assets) at any time, based on the whim of… the government. Translation: More power taken away from the people and given to the government (who wrote this legislation again? Hugo Chavez?)
2.) A new federal agency (under the banner of the Federal Reserve) that will impose more regulatory control over credit card companies, payday advance companies and mortgage companies.
The Good News: Perhaps more restrictions on the types and amounts of fees they can gouge customers with. Pre-payment penalties will likely be eliminated or greatly reduced on certain types of loans and mortgages.
The Bad News: Those fees are where these institutions make much of their profit. While the government presents these regulations as “consumer protection, ” that translates into “less profit” for these entities which, ultimately, means more restrictions on their service to you. Look for new fees on other services to make up the difference, harder to obtain credit cards, harder to qualify for mortgages and more restrictions on availability of payday advances… Yeah, that ought to help the economy recover. If you’re in the construction industry, plan on selling a lot fewer houses. A LOT fewer.
The REALLY Bad News: With new regulations on mortgage companies, it doesn’t take a rocket scientist to realize mortgage money will be much harder to qualify for. With a plethora of unsold homes in foreclosure already flooding the market, that could keep the housing market depressed for years. Couple this with an economy that’s already on life-support and a job market that is – well, for lack of a better term - flat-lining, in most parts of the country, and we could actually see a society where we could have millions of homeless people living on the streets and hundreds of thousands of empty homes sitting in foreclosure. If and when that happens, how long before the government will write (and pass) legislation allowing the government to seize homes that are sitting empty and redistribute the right to live there.
Who would have thought the pompous idiots who helped the Fannie Mae/Freddie Mac debacle trash our economy could come up with something even more foreboding for the future? Way to go Barney and Chris! Would you like to inject us directly with poison next?
3.) The new legislation requires more transparency in the derivatives market.
The Good News: None we can actually measure. Not until the “bad” news is resolved (which the government has absolutely no incentive to do)..
The Bad News: Fill in your own sarcastic comment here about “transparency,” especially if it’s going to work the same way it has with the Obama administration. And it probably will, because they have apparently left it up to Bill Clinton to ask for the definition of “transparency.”
4.) New limits on how much Banks can charge retail businesses when customers use debit cards for purchases and how much they can charge for overdrafts.
The Good News: If you’re a business owner, this means less cost to you when a customer swipes a debit card to make a purchase. So this means the businesses will pass those savings on to us, right? Nope. Not necessarily. Nothing requires businesses to do so.
For those of us who live paycheck to paycheck and occasionally overdraft our account, banks will be forced to reduce the penalty for doing so, meaning they would be limited to how much they can gouge you when they (as comedian Gallagher would say), “charge you more of what they already know you don’t have any of.”
The Bad News: Under the old laws, businesses were required to allow you to use your debit card for ALL purchases, no matter how small. Under the Financial Reform legislation, that restriction is lifted. Look for retailers to jump on the bandwagon of having minimum amounts for purchases using debit cards. You may have to forget about buying that McDouble using the debit card. The consumer’s new credo: “Cash: Don’t leave home without it.” Look for armed robberies to increase as a result.
Even MORE Bad News: With banks making less money per transaction with retailers, reduced fees for overdrafts and other fees, look for them to make it up elsewhere. This could mean buh-bye to that free-checking or, perhaps, more or higher fees for using that debit card to obtain cash at the ATM. Where banks are concerned, you may want to keep that KY Jelly handy. If they can’t screw you one way, they’ll screw you another. And, from what I’ve seen, this 2,319 page legislation isn’t going to do a thing to end that.
Here’s a couple of videos that show various aspects of the legislation:
A) The Good
B) The Bad
C) The Ugly: A Paul Shanklin tribute to the man who helped create the banking debacle, and then in true “End of days” fashion, has co-authored the legislation that’s supposed to resolve the very problem he helped create.
Enjoy your week-end, folks. Good news: Stoutcat returns from vacation next week.
H/T Michelle Malkin