posted
WASHINGTON - The Bush administration Monday proposed the most far-ranging overhaul of the financial regulatory system since the stock market crash of 1929 and the ensuing Great Depression.
The plan would change how the government regulates thousands of businesses from the nation's biggest banks and investment houses down to the local insurance agent and mortgage broker.
Treasury Secretary Henry Paulson unveiled the 218-page plan in a speech in Treasury's ornate Cash Room. He declared that a strong financial system was important not just for Wall Street but also for working Americans.
The administration's plan was already drawing criticism from Democrats that it does not go far enough to deal with abuses in mortgage lending and securities trading that were exposed by the current credit crisis.
Massachusetts Secretary of the Commonwealth William F. Galvin blasted Paulson's approach as "a disastrous backward step that would put the investor in jeopardy" because it would pre-empt state regulation of securities and insurance.
The administration said that it planned to work with Congress to have constructive conversations, but officials would not predict when any aspects of the proposal could be enacted into law.
Asked if Bush's goal was to get the overhaul approved before he leaves office, presidential press secretary Dana Perino told reporters aboard Air Force One, "We'll have to see. It is a big attempt."
The plan, which would require congressional approval for its biggest changes, seeks to trim a hodge-podge collection of overlapping jurisdictions that date back to the Civil War.
It would give the Federal Reserve more power to protect the stability of the entire financial system while merging day-to-day bank supervision into one agency, down from five at present.
It also would create one super agency in charge of business conduct and consumer protection, performing many of the functions of the current Securities and Exchange Commission.
It would propose eliminating the Office of Thrift Supervision and the Commodity Futures Trading Commission, merging their functions into other agencies.
It would ask Congress to establish a federal Mortgage Origination Commission to set recommended minimum licensing standards for mortgage brokers, many of whom now operate outside of federal regulation, and it would also take a first step toward federal regulation of the insurance industry by asking Congress to establish an Office of Insurance Oversight inside the Treasury Department.
Paulson acknowledged in his remarks that most of the changes will not occur until after a lengthy debate in Congress, leaving it to the next administration to deal with the biggest changes proposed by the report. He also said the Bush administration's focus would remain on getting through the current severe credit crisis, which has roiled financial markets since last August.
Paulson rejected Democratic charges that it was lax regulation of mortgage brokers and the financial industry that had led to the current problems.
"I do not believe it is fair or accurate to blame our regulatory structure for the current market turmoil," he said. "I am not suggesting that more regulation is the answer or even that more effective regulation can prevent the periods of financial market stress that seem to occur every five to 10 years."
Banking groups raised strong objections to the plan while other industry groups had mixed reactions.
"Dismantling the thrift charter and crippling state banking charters will weaken banking in America," said Edward Yingling, president of the American Bankers Association.
In Congress, House Financial Services Committee Chairman Barney Frank, who is working on his own regulatory revamp, called Paulson's proposal a "constructive step forward" but said it wouldn't give the Federal Reserve enough authority to carry out its expanded job to police the stability of the entire financial system.
Many Democrats said that Congress' first priority should be to deal with the current mortgage crisis that is threatening millions of Americans with the loss of their homes and that an extensive debate on a regulatory overhaul should not occur until a new president is in office next year.
Senate Banking Committee Chairman Christopher Dodd, D-Conn., said in an appearance on CBS' "Early Show" that it was not a failure of the regulatory scheme but "a failure of leadership" that led to the current crisis.
The proposed overhaul would be the most extensive since the current regulatory system was created in response to the 1929 stock market crash and the Great Depression.
It comes at a time when the financial system faces its most severe credit crisis in two decades, one that has resulted in billions of dollars of losses for big banks and investment houses and the near-collapse of Bear Stearns, the country's fifth-largest investment bank.
The rising tide of bad debt has made it harder for consumers and businesses to get credit, further weighing on an economy struggling with a prolonged housing slump and soaring energy prices. Many economists believe the country is already in a recession.
-------------------- "Simplicity is the ultimate sophistication" Posts: 4005 | From: Shaolin | Registered: Oct 2005
| IP: Logged |
posted
Senate Banking Committee Chairman Christopher Dodd, D-Conn., said in an appearance on CBS' "Early Show" that it was not a failure of the regulatory scheme but "a failure of leadership" that led to the current crisis.
Yes, it's all Bush's fault. It can't possibly be the fact that people simply haven't been responsible enough to live within their means and only accept debt\credit they can repay. No, can't be that.
posted
with the subprime mess? Many, many lenders were promising an easy re-fi into a fixed-rate package...that never materialized. Perhaps now such plans will be offered.
quote:Originally posted by SeekingFreedom: Senate Banking Committee Chairman Christopher Dodd, D-Conn., said in an appearance on CBS' "Early Show" that it was not a failure of the regulatory scheme but "a failure of leadership" that led to the current crisis.
Yes, it's all Bush's fault. It can't possibly be the fact that people simply haven't been responsible enough to live within their means and only accept debt\credit they can repay. No, can't be that.
the Bush Admin pushed this policy hard because most of the individual states were in a budget crisis in '3 and '04...
i drove cross country a couple of times in those years and saw almost no cops. they were out of gasoline money
the "stimulus plan" was designed to boost the tax income of the states. there's alot of tax income associated with home sales and any other big ticket items..
Bush's answer to the economic problems under his admin has always been to tell people to keep spending. the only way they can do that when their income is stagnant (it has been) has been to borrow, just like the Bush admin has done to finance all of it's activities..
the credit crisis at it's root is quite simple, the whole country has borrowed too much. it has borrowed more money than all the money borrowed under allt he other presidents COMBINED...
yes, Bush is the prime mover of this mess.
-------------------- Don't envy the happiness of those who live in a fool's paradise. Posts: 36378 | From: USA | Registered: Sep 2003
| IP: Logged |
posted
here's how bad our fundamentals really are:
U.S. about to become net food importer Food imports may force new food policies Posted by Ken Meter at 8:23 AM on 10 Feb 2006
A little over a year ago The Wall Street Journal (31 Jan 2005) reported that the U.S. would become a net food importer on a more or less permanent basis by the end of 2005. To me, this is an immense challenge to our food security, but also marks a great opportunity for the U.S. to rebuild its food markets. I'm interested in how others see it.
Trade data for December have not been released yet. When they are, we'll know if the Journal's prediction is true. Still, one look at USDA Economic Research Service (ERS) numbers shows the trend is upon us.
The U.S. enjoyed an agricultural trade balance of $12 billion four years ago. By November 2005, we barely had a surplus, after a slide of $5 billion in one year. It seems to be a matter of when, not if.
at the same time? Bush decided to push for agro-fuels...
the Bush policies have clearly been directed to make "consumers' broke and in debt for the remainder of their lifetimes (if possible). it's happening.
this year we become a net importer of food (TOO) and this is not likely to change any time soon.
the US may have teh largest GDP in the world, but we don't actually have a net production of anything, we are are a consumer (not aproducer) nation...
GDP is not a measure of PRODUCTION
The gross domestic product, or GDP, of a country is one of the ways of measuring the size of its economy. GDP is defined as the total market value of all final goods and services produced within a given country in a given period of time (usually a calendar year). It is also considered the sum of value added at every stage of production (the intermediate stages) of all final goods and services produced within a country in a given period of time, and it is given a money value.
The most common approach to measuring and understanding GDP is the expenditure method:
GDP = consumption + gross investment + government spending + (exports − imports), or, GDP = C + I + G + (X-M)
it is a measure of CONSUMPTION.
saying we are strong because we have a high GDP is lying. because most of the consumption is on credit...
-------------------- Don't envy the happiness of those who live in a fool's paradise. Posts: 36378 | From: USA | Registered: Sep 2003
| IP: Logged |
Bernanke Warns of Possible Recession Wednesday April 2, 12:01 pm ET By Jeannine Aversa, AP Economics Writer
WASHINGTON (AP) -- Federal Reserve Chairman Ben Bernanke said Wednesday a recession is possible and policymakers are "fighting against the wind" in trying to steady a shaky economy. He would not say if further interest rate cuts are planned.
Bernanke's testimony the Joint Economic Committee of Congress was a more pessimistic assessment of the economy's immediate prospects than a report he delivered earlier this year. His appearance on Capitol Hill came amid a trio of economic slumps in the housing, credit and financial areas.
"It now appears likely that gross domestic product (GDP) will not grow much, if at all, over the first half of 2008 and could even contract slightly," Bernanke told lawmakers. GDP measures the value of all goods and services produced within the United States and is the best barometer of the United States' economic health. Under one rule, six straight months of declining GDP, would constitute a recession.
Bernanke said "a recession is possible" but he also said he expects more economic growth in the second half of this year and into 2009, helped by the government's $168 billion stimulus package of tax rebates for people and tax breaks for businesses as well as the Fed's aggressive reductions to a key interest rate.
"Much necessary economic and financial adjustment has already taken place, and monetary and fiscal policies are in train that should support a return to growth in the second half of this year and next year," Bernanke said.
To try to limit the damage, the Federal Reserve has aggressively cut a key interest rate, now at 2.25 percent, to spur buying and investing by individuals and businesses. At the Fed's last meeting in March, however, two members dissented from the Fed's decision to sharply cut rates, showing a rare division in the often unified front the Fed shows the public. The dissenting officials, who had reputations for being extra concerned about inflation, favored a smaller reduction. Although Bernanke said he hopes inflation will moderate in coming quarters, he acknowledged that high energy prices have clouded the inflation outlook.
Many economists had predicted the Fed might drop it key that rate again when it next meets April 29-30, although Bernanke's remarks cast some doubt on that scenario.
"We are fighting against the wind," Bernanke said. The Fed's interest rate cuts and other actions are working their way through the economy and are having the effect of "at least offsetting significantly the headwinds coming from these financial factors," he said.
On Wall Street, stocks initially dropped after the Fed chief's remarks but later turned slightly positive.
Housing, credit and financial woes are threatening to push the country into a deep recession. The situation has emerged as a top concern for presidential contenders and a hot-button issue for Congress. It has thrust the White House and the Fed in crisis-management mode.
Faced with mounting home foreclosures and job losses, Bernanke has been under immense political and public pressure to provide relief and help turn around a faltering economy.
Committee Chairman Sen. Charles Schumer, D-N.Y., peppered Bernanke with questions about the Fed's moves to aid once mighty Wall Street firm Bears Stearns and then juxtaposed that with -- what he believed was a lack of help -- to millions of people at risk of losing their homes.
"I hope that you will use your position to jawbone this administration to get behind the housing relief effort before Congress." Schumer said. "Addressing the housing crisis head-on will do as much to instill confidence in the markets as lowering interest rates or bolstering regulatory oversight of wayward mortgage lenders and financial institutions. We need to do all of it."
Sen. John Sununu, R-N.H., countered that government is taking steps to help. "The suggestion that the Fed's taken action but nothing else has been done I think is a little bit misleading," he said.
"Wall Street has been helped. Now it's time to help Main Street," added Rep. Carolyn Maloney, D-N.Y.
Many private analysts believe the economy contracted in the first three months of this year, signaling the start of a recession. The government releases first-quarter results later this month. The economy lost jobs in January and February, with many economists bracing for more losses when the report for March is released on Friday. Bernanke said he expected unemployment to move "somewhat higher in coming months."
"Clearly, the U.S. economy is going through a very difficult period," he told lawmakers, adding that all the problems have weighed heavily on consumers whose spending is indispensable to economic vitality.
The Fed also has taken a series of extraordinary steps in recent weeks and months to prop up the nation's financial system, which has been in state of high jeopardy.
In a controversial move, the Fed backed a $29 billion lifeline as part of JP Morgan's deal to take over the troubled Bear Stearns, the nation's fifth largest investment house, which was on the brink of bankruptcy. Bear Stearns had invested heavily in risky mortgage-backed securities that eventually soured with the collapse of the housing market.
Bernanke defended the move. "With financial conditions fragile, the sudden failure of Bear Stearns likely would have led to a chaotic unwinding of positions in those markets and could have severely shaken confidence," he said. "The damage caused by a default by Bear Stearns could have been severe and extremely difficult to contain."
Although the taxpayers are on the hook for the $29 billion, Bernanke said he was "reasonably confident we'll be able to recover the full amount." He also said that Bear Stearns' investments that the Fed took control of "are entirely investment grade."
In addition, the Fed -- in the broadest use of its credit authority since the 1930s -- agreed to temporarily let big investment firms obtain emergency financing from the Fed, a privilege that previously had been granted only to commercial banks.
Those actions have prompted criticism from Democrats and others who contend that the Fed is bailing out Wall Street and putting billions of taxpayers' dollars at potential risk. Bernanke and the Bush administration argued that the actions were warranted to avert a potential meltdown in the entire financial system, something that would have devastating consequences for the overall economy.
Asked about the Bush administration's plan to revamp the country's creaking financial system, Bernanke said it was vital for the Fed to have sufficient enforcement powers. Under the plan, the Fed would become a top cop in charge of financial market stability but would lose its day-to-day supervision of U.S. banks.
-------------------- "Simplicity is the ultimate sophistication" Posts: 4005 | From: Shaolin | Registered: Oct 2005
| IP: Logged |
GDP measures the value of all goods and services produced within the United States
what point to our economy is the domestic services industry? this includes, for one thing all sporting events...
how much of the productivity of our economy is based on watching a game? it has no bearing on our relative strength as a nation. sure it creates jobs, but no PRODUCTIVITY happens.
our combined personal revolving( non-secured) and govt debt is now about equal to three years of our total household income... we are three years in debt, without having any money to live on... if we were a business? we'd be in Federal Court looking for bankrucpty protection.
-------------------- Don't envy the happiness of those who live in a fool's paradise. Posts: 36378 | From: USA | Registered: Sep 2003
| IP: Logged |
WASHINGTON/PARIS, March 31 (Reuters) - Food prices are soaring, a wealthier Asia is demanding better food and farmers can't keep up. In short, the world faces a food crisis and in some places it is already boiling over.
Around the globe, people are protesting and governments are responding with often counterproductive controls on prices and exports -- a new politics of scarcity in which ensuring food supplies is becoming a major challenge for the 21st century.
Plundered by severe weather in producing countries and by a boom in demand from fast-developing nations, the world's wheat stocks are at 30-year lows. Grain prices have been on the rise for five years, ending decades of cheap food.
Drought, a declining dollar, a shift of investment money into commodities and use of farm land to grow fuel have all contributed to food woes. But population growth and the growing wealth of China and other emerging countries are likely to be more enduring factors.
World population is set to hit 9 billion by 2050, and most of the extra 2.5 billion people will live in the developing world. It is in these countries that the population is demanding dairy and meat, which require more land to produce.
In Gurria's native Mexico, tens of thousands took to the streets last year over the cost of tortillas, a national staple whose price rocketed in tandem with the price of corn (maize).
Global food prices, based on United Nations records, rose 35 percent in the year to the end of January, markedly accelerating an upturn that began, gently at first, in 2002. Since then, prices have risen 65 percent.
In 2007 alone, according to the U.N. Food and Agriculture Organization's world food index, dairy prices rose nearly 80 percent and grain 42 percent.
"The recent rise in global food commodity prices is more than just a short-term blip," British think tank Chatham House said in January. "Society will have to decide the value to be placed on food and how ... market forces can be reconciled with domestic policy objectives."
Many countries are already facing these choices. ....
A number of governments, including Egypt, Argentina, Kazakhstan, and China, have imposed restrictions to limit grain exports and keep more of their food at home.
-------------------- "Gentleman, you have come sixty days too late. The depression is over." Herbert Hoover 1930 Posts: 678 | From: currently in hiding due to investigation | Registered: Oct 2004
| IP: Logged |
UBBFriend: Email this page to someone!
Printer-friendly view of this topic
![[Wall Bang]](graemlins/wallbang.gif)
![[Roll Eyes]](rolleyes.gif)
because most of the consumption is on credit...
