Dodd's "14 Points" on Financial Reform= Failure

"The Senate is expected to take up a proposal, originally authored by Senator Chris Dodd (D–CT), to reform the financial regulatory system in the U.S. The goal is clear: to minimize the chances that another financial crisis—and bailouts—will arise again.

The objective is a good one. Unfortunately, the 1,408-page bill includes numerous provisions that would hurt—not help—consumers and the economy. It would even make another financial crisis or bailout more likely to occur."

That statement comes from the Heritage Foundation. They also listed fourteen flaws with the Financial Overhaul bill:

1. Creates a protected class of “too big to fail” firms. Section 113 of the bill establishes a “Financial Stability Oversight Council,” charged with identifying firms that would “pose a threat to the financial security of the United States if they encounter “material financial distress.” These firms would be subject to enhanced regulation. However, such a designation would also signal to the marketplace that these firms are too important to be allowed to fail and, perversely, allow them to take on undue risk. As American Enterprise Institute scholar Peter Wallison wrote, “Designating large non-bank financial companies as too big to fail will be like creating Fannies and Freddies in every area of the economy.”[1]

2. Provides for seizure of private property without meaningful judicial review. The bill, in Section 203(b), authorizes the Secretary of the Treasury to order the seizure of any financial firm that he finds is “in danger of default” and whose failure would have “serious adverse effects on financial stability.” This determination is subject to review in the courts only on a “substantial evidence” standard of review, meaning that the seizure must be upheld if the government produces any evidence in favor of its action. This makes reversal extremely difficult.

3. Creates permanent bailout authority. Section 204 of the bill authorizes the Federal Deposit Insurance Corporation (FDIC) to “make available … funds for the orderly liquidation of [a] covered financial institution.” Although no funds could be provided to compensate a firm’s shareholders, the firm’s other creditors would be eligible for a cash bailout. The situation is much like the scheme implemented for AIG in 2008, in which the largest beneficiaries were not stockholders but rather other creditors, such as Deutsche Bank and Goldman Sachs[2]—hardly a model to be emulated.

4. Establishes a $50 billion fund to pay for bailouts. Funding for bailouts is to come from a $50 billion “Orderly Resolution Fund” created within the U.S. Treasury in Section 210(n)(1), funded by taxes on financial firms. According to the Congressional Budget Office, the ultimate cost of bank taxes will fall on the customers, employees, and investors of each firm.[3]

5. Opens a “line of credit” to the Treasury for additional government funding. Under Section 210(n)(9), the FDIC is effectively granted a line of credit to the Treasury Department that is secured by the value of failing firms in its control, providing another taxpayer financial support.

6. Authorizes regulators to guarantee the debt of solvent banks. Bailout authority is not limited to debt of failing institutions. Under Section 1155, the FDIC is authorized to guarantee the debt of “solvent depository institutions” if regulators declare that a liquidity crisis (“event”) exists.

7. Limits financial choices of American consumers. The bill contains a new “Bureau of Consumer Financial Protection” with broad powers to limit what financial products and services can be offered to consumers. The intended purpose is to protect consumers from unfair practices. But the effect would be to reduce available choices, even in cases where a consumer fully understands and accepts the costs and risks. For many consumers, this will make credit more expensive and harder to get.[4]

8. Undermines safety and soundness regulation. The proposed Bureau of Consumer Financial Protection would nominally be part of the Federal Reserve System, but it would have substantial autonomy. Decisions of the new bureau would not be subject to approval by the Fed. New rules could be stopped only through a cumbersome, after-the-fact review process involving a council of all the major regulatory agencies. This could impede efforts of economic (or “safety and soundness”) regulators to ensure the financial stability of regulated firms, as the new, independent “consumer” regulator would establish rules that conflict with that goal.


9. Enriches trial lawyers by authorizing consumer regulators to ban arbitration agreements. Section 1028 specifically authorizes the new consumer regulatory agency to ban arbitration agreements between consumers and financial firms. By reducing the use of streamlined dispute resolution procedures, more consumers and businesses would be forced to pay the costs of litigation—to the benefit of trial lawyers.

10. Subjects firms to hundreds of varying state and local rules. Section 1044 limits pre-emption of state and local rules, subjecting banks and their customers to confusing, costly, and inconsistent red tape imposed by regulators in jurisdictions across the country.

11. Subjects non-financial firms to financial regulation. Regulation under this legislation would extend far beyond banks. Many firms largely outside the financial industry would find themselves caught in the regulatory net. Section 102(B)(ii) of the bill defines a “nonbank financial company”” as a company “substantially engaged in activities … that are financial in nature.” The phrase “financial in nature” is defined in existing law quite broadly. According to former Treasury official Gregory Zerzan, it includes things such as “holding assets of others in trust, investing in securities … or even leasing real estate and offering certain consulting services.”[5] As a result, a broad swath of private industry may find itself ensnared in the financial regulatory net. As Zerzan explains: “An airplane manufacturer that holds customer down payments for future delivery, a large home improvement chain that invests its profits as part of a plan to increase revenues, and an energy firm that makes markets in derivatives are all engaged in ‘financial activities’ and potentially subject to systemic risk regulation.”

12. Imposes one-size-fits-all reform in derivative markets. The bill would subject derivatives now traded over-the-counter by banks and other financial institutions to regulation by the Commodity Futures Trading Commission and/or the Securities and Exchange Commission (SEC). It would require most derivative contracts to be settled through a clearinghouse rather than directly between the parties. Yet derivatives are already increasingly being traded on clearinghouses thanks to private efforts coordinated by the New York Fed.[6] The Senate’s bill, however, would require virtually all derivatives to be so traded. Applying such ill-designed blanket regulation would make financial derivatives more costly, more difficult to customize, and, consequently, less widely used—which would increase overall risk in the economy.[7]

13. Allows activist groups to use the corporate governance process for issues unrelated to the corporation or its shareholders. Section 972 of the bill authorizes the SEC to require firms to allow shareholders to nominate directors in proxy statement. Such proxy access turns corporate board elections from a process designed to ensure that each board has a good mix of skills and experience into a popularity contest where the long-term interests of the stockholders become secondary to political agendas or corporate raiders. The process can also be used by labor unions, politicians who manage public pension funds, and others to force corporations to respond to pet social or political causes.

14. Does nothing to address problems at Fannie Mae and Freddie Mac. These two government-sponsored housing giants helped fuel the housing bubble. When it popped, taxpayers—because of an implicit guarantee by the U.S. Treasury—found themselves on the hook for some $125 billion in bailout money. Not only has little of this amount been paid back, but the Treasury Department recently eliminated the cap on how much more Fannie and Freddie can receive. Yet the bill does nothing to resolve the problem or reform these government-run enterprises.


Common Sense- I know that I took this information for the Heritage Foundation I figure they could explain it better than I could (even still, I don't really understand all of it and I'm sure many of you don't either). However, I do understand that this Financial Overhaul bill does not stop another economic crisis from occurring. It only pushes government further into the FREE market. It allows government to control aspect of the economy that should be left alone. It really scares me how much government is becoming involved in our lives. We need to protect our freedoms and make sure those that propose such progressive legislation never get elected again in November.

Saving the "Melting Pot"

This past week, Arizona Governor Jan Brewer (R) signed a new immigration policy into law. The policy allows police officers to stop suspected illegal immigrants and ask them for proof of citizenship. Officers can those detain those who fail to prove they are US citizens. The law has come under attack from many in the state and across the nation, including President Obama, who called the law "misguided". President Obama has even asked the Justice Department to investigate to see if the law is "illegal and approves of racial profiling". Many opponents claim that the law allows for racial profiling of Hispanic Americans. State Sen. Rebecca Rios, a Phoenix Democrat and fourth-generation Arizonan, said she's concerned about her 14-year-old son being harassed by police because of his brown skin, black hair and dark-brown eyes.

"I don't want my son or anyone else's son targeted simply because of their physical characteristics," Rios said. "There's no reason I should have to carry around any proof of citizenship, nor my son."

Common Sense- First, let me state that I believe America to have been and always will be a "melting pot" for all nations. Many of us, myself included, would not be Americans if it were not for our ancestors who decided to make a better life for themselves. But, I also know that my ancestors came to this country LEGALLY and became LEGAL citizens of this country. They worked hard, paid their taxes, and never asked for a free handout. If you want to come to this country, become an American citizen and follow the rules just like the rest of us. With that said, I do share concerns with the opponents of the new law. I hope that racial profiling does not become a result of this law and that officers will use true and honest judgment. However, I do support the new reform bill. It is a start to stopping the flood of illegal immigrants into this country. I also support a National ID card which would require all citizens to carry a card that shows that they are citizens of this country. It would identify those who don't belong in this country and help to reform immigration. To those who claim this law supports racial profiling, I say this: "If you are an American citizen and are able to prove that you are, what are worried about?"

Crist vs. GOP

Florida Governor Charlie Crist is facing pressure from GOP leaders to not seek the US Senate seat. Crist, who became governor in 2007, has been under attack from the GOP and conservatives within the past few months for accepting stimulus funds from the Obama administration. Most recently, Crist is under attack for vetoing a "teacher tenure" bill that would have fired teachers and granted raises based on student test scores. Many conservatives and Republican leaders, including former Governor Jeb Bush, supported the bill. Crist's veto was largely supported by teacher's unions.

There is also another factor facing Crist. Republican representative Marco Rubio. Rubio, who was elected in 2000 and served as Florida's Speaker of the House from 2006-2008, is the biggest threat to Crist at the current time. Rubio has gained large support from across nation, including endorsements from Governor Mitt Romney, US House of Representatives Minority Whip Eric Cantor, and other leaders within the Florida government.




From a poll taken by Quinnipiac University on April 15th, Marco Rubio led Charlie Crist by 23%. However, there may be an out for Crist. While many are calling for him to not seek the Senate seat, others are calling for Crist to run as an Independent. Quinnipiac University polls show that Crist would have a slight narrow lead over Rubio if he ran as an Independent. Christ has stated that he is a "proud Republican" and isn't sure about leaving the party. However, as the primary filing comes to a close at the end of April, Crist will have to choose to stay with the GOP or jump ship to become an Independent. Many Republican leaders, including Senator John McCain, said they will not back Crist if he becomes an Independent.


Common Sense- In my opinion, I think Crist should remove himself as a candidate for the Senate seat, as a Republican and as an Independent. If Crist runs as a Republican, most statistics show that he will lose. If he runs as an Independent, Crist runs the risk of splitting the Republican ticket and possibly opening the door the Democrat candidate, Kendrick Meek, who has trailed both Rubio and Crist. I saw Marco Rubio at the Conservative Political Action Conference this past February in Washington D.C. He is a true conservative who represents fiscal responsibility and conservative values. He is a young, fresh face and the type we need for the Republican party. If Crist has any real common sense, he will drop out of the race and throw his support behind Rubio.

Beam Me Up, Mr. President

President Obama addressed an audience today at Kennedy Space Center in Florida recommitting the US to space exploration. I applaud unusual) Mr. Obama's support of NASA's continued exploration into space. Although I believe that we should continue exploration, like Obama suggests, of asteroids and Mars, I do believe we should also plan to visit the Moon again in the near future.

Friends, Romans, Countrymen, Lend Me Your Earmarks

$900 million. That's how much Congress spent on earmarks, or state pet projects, last year. Your and mine hard earned money going towards projects such as textile research in North Carolina, tattoo removal in California, and fish management in Alabama. For the 2010 fiscal year, the federal budget included $16.5 billion in state projects. Again, 16.5 billion dollars. The biggest offenders, according to Citizen's Against Government Waste, were Thad Cochran (R- Mississippi) and Daniel Inouye (D- Hawaii). Cochran, the ranking Republican on the Senate Appropriations Committee, had his name on 240 projects totaling $490 million. Inouye, chairman of the Appropriations Committee, had 151 projects totaling $387 million.

Thad Cochran (R- Mississippi)



Daniel Inouye(D- Hawaii)




The good news (if there is any)? Earmarks are down from last year by ten percent. But, earmarks are still fifteen times larger than in 1991. Among some of the pet projects included in this years budget are funding for shrimp/fishing research, potato research, pickle science (excuse me while I laugh), wool research, anti-drug school programs, local museums, and military projects that even the Pentagon rejected. Defense Secretary Robert Gates even spoke out against the large amount of funding the Pentagon received, stating it was "unnecessary".

Some lawmakers are trying to stop earmarks. Republicans in Congress proposed banning earmarks all together but the bill failed. Democrats proposed a bill against earmarks but only banned corporations. Again, the bill failed.

"I think it's a very admirable goal for the GOP to take a complete earmark moratorium. Enforcing it is going to be an issue," said Leslie Paige from Citizens Against Government Waste. "Ultimately," she said, "it's going to be up to taxpayers — if they don't like it, they are going to make those feelings known to Congress.

Common Sense- The amount of money that Congress spends on earmarks is both amazing and disgusting. I don't know where Mr. Cochran and Mr. Inouye think they have the right to ask for such money. Maybe they think they deserve it for serving on the Appropriations Committee. But it is not just them. It is all of our representatives, on both sides of the aisle, that continue to request money for state projects that are, in most cases, absolutely ridiculous. Pickle research? Are you serious? You know things are pretty bad when the Secretary of Defense tells you that the money you are trying to give him is "unnecessary". It's time we tell Congress, Republicans and Democrats, to stop the ridiculous spending on state projects. Please write your representatives and ask them to stop the pork barrel legislation!

Obama's Hometown District to go to GOP?

Most Americans would not focus on a Congressional race in a state other than their own, let alone Hawaii. However, a race for President Obama's hometown district is gaining national attention.

Honolulu City Councilman, Charles Djou, is the Republican candidate. The race draws national attention because Democrat Neil Abercrombie, who represents Hawaii's 1st Congressional District which contains Obama's hometown, is stepping down to run for governor. Over the past few weeks, Djou has received endorsements from key Republicans, such as Mitt Romney and Minnesota Governor Tim Pawlenty, who have both been picked to run for President in 2012. Romney called Djou "a fiscally responsible conservative who can focus on turning the economy around".

The Democratic candidates include former Representative Ed Case and state Senate President Colleen Hanabusa. In most states, state party leaders select candidates or states hold primaries in the case of special elections. In Hawaii, all three candidates will be on the ballot. Republicans hope that having two Democrats on the ticket will split the vote and allow for Djou's victory. The special election is being held by mail, strangely enough, and will end May 22nd.

Despite confidence from Republicans, the polls aren't real clear. In January, a poll reported that Case had 37%, Hanabusa had 25%, and Djou had 17% of the vote. However, a poll released by the Democratic Congressional Campaign Committee last week showed Case and Djou tied at 32%, Hanabusa at 27%, and nine percent undecided.





Common Sense- If Djou were to win this special election, it would be a political and moral defeat for Democrats. Politically, it would loosen their grip on the House of Representatives and prove that Democrats have lost tough with the American people. It would also signal a sign of things to come in November with more Democrats losing their seats (and I would love to wipe that stupid smile of Pelosi's face). Morally, if you're Obama, how depressing is it to know that your hometown and place of your birth falls to a Republican? I'm sure many of you say "why would he care" or "it wouldn't affect him". You may be right. He may not show that it affects him but you never really know what's going on inside someones' head now do you? The race is close and there is still over a month to go. Djou needs to stay strong, campaign on the issues that really matter, and not be drawn into petty fights with Democrats when they attack him.

Republicans Don't Need to have Minds of "Steele" to Win

While GOP Party leader, Michael Steele, is out defending and/or apologizing for some verbal, spending, or managerial mistake, Republican leaders are working behind the scenes. Many leaders are going around Steele in an attempt to take control of Congress in the midterm elections this November. Republicans are beginning to rely less on Steele's party headquarters for advice and, in some cases, funds. This decision comes after many episodes involving Steele, or his staff, including controversies over party spending and a party-paid trip to a Hollywood strip club. On Saturday, at the Southern Republican Leadership Conference in New Orleans, Steele recognized the mistakes he and his staff have made. "I'm the first here to admit that I've made mistakes and it's been incumbent on me to take responsibility to shoulder that burden, make the necessary changes and move on," Steele said.

Steele's statement came only days after a letter released by GOP headquarters revealed that only half of Republican National Committee members approve of the job Steele is doing. Many believe that the focus on Steele draws negative attention to Republicans and the GOP when a crucial election is fast approaching. Many Republican candidates are reaching out to other sources for their campaigns instead of the GOP headquarters. Senate Minority Leader, Republican Mitch McConnell, and House Minority Leader, Republican John Boehner, have already started efforts to gain funds from the National Republican Senatorial Committee and National Republican Congressional Committee. While Republicans have refrained from attacking Steele in public, they have offered advice to the leader. However, many have stated that Steele will continue on his own path and handle the issue alone. With less than seven months from the midterm elections, Republicans are focusing their attention on Democrats.

Common Sense- I believe the decision to move away from Steele and the RNC at this time is crucial. I am not saying that Republicans should turn their back on Steele and start attacking him publicly. What I am saying is that Republicans need to focus on the issues at hand and continue to attack the Democrats. They need to keep talking about the issues that are important to the American people and keep the "Steele issue" on the back burner until after the election. Some Republican leaders have called for Steele to step down. I believe this to be a BIG mistake. Asking Steele to step down would only damage the GOP right now, not benefit it. My advice, once again, is for Republicans to focus on the issues that are important, keep Steele on the sideline, and worry about him after the election.