Stunner. New Financial Rules May Not Curb Another Major Meltdown
Of course they won’t.
You’ve got to love the photo the AP chose for this article. Rep. Barney Frank and Sen. Chris Dodd were too of the chief players behind the 2008 mortgage crisis. Now they are the ones who helped draft the fix. That ought to work out just swell.
The most sweeping changes to financial rules since the Great Depression might not prevent another crisis.
Experts say the financial regulatory bill approved by the Senate last week, and a similar bill that passed the House, include loopholes and gaps that weaken their impact. Many provisions depend on the effectiveness of regulatory agencies — the same agencies that failed to foresee the last crisis.
A big reason for the bill’s limitations is that banks and industry groups lobbied against rules they felt would reduce their profit-making ability.
The financial sector’s influence in Washington reflects its enormous donations and lobbying. Over the past two decades, it’s given $2.3 billion to federal candidates. It’s outdone every other industry in lobbying since 1998, having spent $3.8 billion.
Another reason this will never work is because Freddie Mac and Fannie Mae, the two mortgage giants that reportedly started the whole crisis, are not even included in this bill. The two giant mortgage firms, which are both owned by the U.S. government, will cost the public more than the banks, auto makers or even American International Group but are not included in the democrat’s reform bill.