Obama wants to extend the powers of the Fed. Then again he wants to take some powers away from the Fed. It’s hard to know what he is thinking until you boil it down to its essence. Being president is not enough, Obama wants to become the Czar of Czars with the “Power to Punish”.
Shades of Roosevelt, Obama to Create Consumer Financial Agency With Power to Punish.
President Barack Obama will propose creating an agency to protect consumers of financial products with the power to punish offending firms and stripping the Federal Reserve of some of its powers.
The Consumer Financial Protection Agency, to be announced tomorrow in the overhaul of financial regulations, will have the authority to ban “unfair terms and practices,” said a document obtained by Bloomberg News. Those powers now rest with Fed.
“We’ve got to make sure that we have somebody who is focused and responsible for protecting consumers, whether it’s on subprime loans, for their mortgages, for their credit cards,” Obama said today in an interview with Bloomberg Television.
Lawmakers, including Senate Banking Committee Chairman Christopher Dodd, have faulted the Fed for not using its authority to ban “unfair or deceptive acts” in consumer lending, and have opposed expanding the Fed’s power to act as a systemic-risk regulator for financial markets. The Fed has responded by writing rules strengthening consumer protections in credit-card and mortgage lending.
“In some cases, we’re expanding modestly the Fed’s powers,” Obama said. “In other circumstances, we’re actually going to relieve them of some responsibilities, for example, on the consumer side.”
Fed spokeswoman Michelle Smith declined to comment.
Obama’s plan will let the agency set mortgage rules, write rules for banks and non-bank companies, supervise and examine institutions for compliance, and set fines and penalties for offenders, according to the document.
That may sound good on paper or in soundbites delivered by the great orator. However, I suspect it will end up doing nothing more than extending government control over every aspect of our lives to the point of sheer ridiculousness, all for political gain.
No one, and I mean NO ONE in any position of authority has placed the blame where it belongs. And the onus of that blame should be placed squarely on the very existence of the Fed in conjunction with the free lunch policies of Congress.
Unless and until the root cause of this mess is addressed, nothing good can possibly come from all this meddling no matter how good it sounds at first glance.
Now instead of reducing the powers of the Fed, Obama wants to increase them while at the same time threatening businesses with a whole new bureaucratic nightmare with the “Power to Punish”.
I have a better idea, and it’s far simpler: Let’s eliminate the Fed and balance the budget. The rest of the problems will then easily cure themselves.
Mike “Mish” Shedlock
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