From John Boehner,Republican Leader
SEC Commissioner:“There Are No Clear Limits On The Degree Of Government Intervention That Could Be Expected.”
With a new national survey showing that nearly eight in 10 Americans say they don’t trust the federal government,Washington Democrats are getting ready to force through Congress a permanent bailout bill that establishes an unelected council of federal regulators with the power to seize any U.S. business and do with it as they see fit.
The permanent bailout bill authored by Senate Banking Chairman Chris Dodd (D-CT) creates a Financial Stability Oversight Council (FSOC) made up of federal regulators – including representatives from the Treasury Department,the Federal Reserve,the CFTC,FDIC,and the SEC. In other words:the government bureaucracies asleep at the switch the last time around.
This clique of regulators could – by a 2/3 vote – deem any firm (financial or non-financial) “systemically significant,” which is merely jargon for other jargon:“too big to fail.” At that point,according to economist Larry Lindsey,the Council would “authorize the FDIC and Treasury Secretary to treat each of the firm’s shareholders and creditors as they choose,without regard to bankruptcy law.” Any institution could be ordered to “break itself up,stop selling certain products,or even go out of business,” according to the Heritage Foundation.
INSTITUTIONALIZING “TOO BIG TO FAIL,” HURTING SMALL BANKS. Senior Atlantic editor Clive Crook sees the council of regulators as a major factor in how Washington Democrats’ permanent bailout bill institutionalizes “too big to fail”:
Sen. Dodd’s bill “adds new bodies … a Financial Stability Oversight Council to coordinate the policing of systemic risks. Overall,after much shuffling of duties among this expanded list of regulators,the plan makes the system more complicated,not less. … Under the Dodd plan,although the senator denies it,many big financial firms would indeed be declared too big to fail. The market would put banks that meet the assets threshold for Fed supervision into this category. Other financial firms would be viewed the same way if the Financial Stability Oversight Council designates them as ‘systemically significant.’"(National Journal,3/20/10)