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Some pundits are bemused at Mitt Romney remark about financial regulation at last night's debate.

Regulation is essential. You can't have a free market work if you don't have regulation. As a businessperson, I had to have -- I need to know the regulations. I needed them there. You couldn't have people opening up banks in their -- in their garage and making loans. I mean, you have to have regulations so that you can have an economy work. Every free economy has good regulation. At the same time, regulation can become excessive.

But this is almost exactly what he said at the Republican debate in January.

Markets have to have regulation to work. You can`t have everybody open a bank in their garage. You have to have regulation, but it`s got to be up to date. And they didn`t have capital requirements put in place for the different classes of assets banks had. They also didn`t have regulation properly put in place for mortgage lenders. Derivatives weren`t being regulated. You need to have regulation that`s up to date. They had old regulation, burdensome. Then they passed Dodd-Frank, which the Speaker is absolutely right. It has made it almost impossible for community banks.

This is smart positioning: I'm not against all financial regulations, I'm against Obama's regulations. And Obama's response wasn't effective at all, because his punchline "Does anybody out there think that the big problem we had is that there was too much oversight and regulation of Wall Street?" doesn't directly answer Romney's position.

The only proper rebuttal here was to say that Romney just isn't credible when he touts the importance of regulation -- because he spends most of his time and energy saying how he's going to get rid of them.

"Small businesses are the engine of job creation in this country, but they will struggle to succeed if taxes and regulations are too burdensome or if a government in Washington does its best to stifle them. Mitt will pursue comprehensive tax reform that lowers tax rates for all Americans, and he will cut back on the red tape that drives up costs and discourages hiring."

And:

"As president, Mitt Romney will cut federal spending and regulation, and bring much-needed reforms to Medicare and Social Security."

Indeed, he has an entire section of his campaign website that's dedicated to repealing regulations.

"Multiple factors contribute to America’s faltering performance. But a major part of the problem over successive presidencies, and one that the Obama administration has sharply exacerbated, is the regulatory burden on the economy. Regulations function as a hidden tax on Americans, with the federal government’s own Small Business Administration placing the price tag at $1.75 trillion annually—much higher than the entire burden of individual and corporate income taxes combined."

Unforced error by Team Obama.

Darrell Issa recently decided to outsource his oversight duties to think tanks, industry organizations and lobbyists. He has requested their input into what they hate about government oversight and promises to have a report soon. In the meantime, CREW has done a great job of rounding up responses sent to him. Really, he should have just written to the Heritage Foundation and Cato Institute, because they cover all the bases.

To be concise, they want all EPA regulatory responsibility ended, a complete rollback of patient rights under the PPACA (including a reinstatement of the right to exclude for pre-existing conditions), a complete rollback of Wall Street regulation, an end to credit card regulatory reforms, and more. Really, I could have written their letter in one page, instead of ten. It would go like this:

Dear Rep. Issa,

Thank you for the opportunity to submit ideas on what government policies hinder job creation. No doubt there are specific policies we could look at more carefully, but suffice it to say that all legislation passed in the last two years should be repealed. Then maybe our largest donors would consider hiring employees again, for substandard wages and without any health coverage or other benefits. We could do this and pay them just enough to stimulate the economy so that our Wall Street friends can recapture what we spend in the form of another market crash.

Sincerely,

Heritage Foundation

I've embedded their actual 10-page response below.

Continue reading »

While it may not be as sex-ay as Breitbart punking every mainstream media outlet on the planet, it's worthy of note: the landmark Wall Street Reform legislation promised in 2008 at the height of the financial meltdown has now been signed into law.

Before everyone drowns in a sea of "but-buts" over what they DIDN'T get, let's talk about what WAS delivered:

• Tighter consumer protections on credit cards and lending. Among them: Simplified contracts, requirement for more transparency in disclosures, full advance fee disclosure, free credit reports once per year
• Consumer Protection Agency - This places all responsibility for monitoring and enforcing consumer protections under one roof, so that there is recourse and resources available to consumers from the Federal Government. Elizabeth Warren, who is one of the top candidates to head the agency, viewed this piece of the law as the foundation. Republicans fought tooth and nail on this, but it survived and became part of the final bill.
• The end of "too big to fail" Yes, it really does end too big to fail. If institutions are teetering on insolvency and present a risk to the financial system, there is now a procedure in place to unwind them in an orderly fashion without infusions of government dollars to prop them up.
• Real time reporting and transparency This is one of those quietly powerful provisions. Financial and trading data will be required to be available in real time in a standardized data format that can be used for analysis and review in order to be proactive about emerging anomalies and trends before they become a problem.
• Stronger requirements for bank capitalization Without climbing deep into wonk-land here, requiring banks to actually have a better debt-to-asset ratio with some stake in the loans they originate will do much to stabilize the industry and move forward.
• Shareholders now have a say in CEO compensation. That may not seem like much, but traditionally, shareholders don't have a lot to say about any company operations, so it does offer an opportunity for people to send a message to the CEOs of these companies.
• An end to "debit card fee bloat" - The pass-through of debit card fees is now limited to actual costs, instead of the routine bloat banks have attached in the past. This one should be interesting to watch...if people pay attention.
• Limits on rate hikes for existing credit card balances
• The Volcker Rule - Banks may no longer trade securities for their own profit while also managing customer investments.

There are more, but it would require you to follow me down into the rabbit hole to WonkLand. But here's one term everyone should know, and remember: Systemic Risk.

Systemic Risk is the heart of this legislation. It controls how regulators are to approach their regulatory duties: Single-mindedly, with the goal of identifying and smoothing systemic risk. What is systemic risk? Any risk which poses, or might pose in the future, a threat to the stability of the financial system and consumers.

It's a very large, very important concept which is the heartbeat of this legislation. It's critically important, and to a large extent, smooths the sharp edges of critics who say this legislation doesn't go far enough. By setting systemic risk elimination as the primary goal, it goes farther than any Wall Street reform legislation we've seen since the days of Glass-Steagall and Depression-era reforms.

So in between floggings of the administration and Congress for their failures, let's at least take note of the fact that with today's signing, this Congress and Administration have delivered some of the farthest-reaching legislation in decades. It may not satisfy all, but it's a significant accomplishment worthy of note.

Judd Gregg strode to the Senate floor yesterday and denounced the provision in the Dodd bill to remove derivatives from banks and put them on their own exchange in the sunlight for everyone to see. Remarkably, he centered his argument around the irrationality of populist anger, which he likened to Argentina in the 50s and the Peron years.

You know, I have really been trying to figure out what's behind this type of language [derivatives sunlight], because it's so destructive to our competitiveness as a nation, really.

I mean, this is the type of thing, as I said earlier, you would have seen in Argentina that -- Argentina in the 1950s -- bashing on entities simply because they're large and because obviously there's a populist feeling against them, which ends up, by the way, significantly affecting Main Street in a negative way.

Look at Argentina in 1945 - 1937, somewhere in that period. They were the seventh-best economy in the world. 7th most prosperous in the world. Now they're like 54th or something.

It is because of this populist movement which has driven basically their ability to be competitive offshore.

So now we have this huge populist movement here. I'm trying to think, what really is the rationale here other than just rampant pandering to populism?

He follows that with this:

Is there anything in this country that gets broken up because there is an attitude that big is bad, whether it contributes or not, unless you happen to be big and union, in which case you get saved, as the UAW was able to work out for GM and Chrysler.

Senator Gregg is either arguing for a corrupt extreme right regime or he has not studied Argentina's history lately. Here's a quick review. Argentina's economy followed other emerging countries in the early 1900s. In 1920, it was the 7th largest economy in the world, but the Wall Street crash took a deep toll.

Unfortunately, the 1930s witnessed a reversal in the legitimacy of the rule of law in Argentina. To stay in power in the 1930s, the Conservatives in the Pampas resorted to electoral fraud, which neither the legislative, executive, or judicial branches checked. The decade of unchecked electoral fraud lead to the support of citizens for the populism of President Juan Peron and the impeachment of the majority of the Supreme Court. The aftermath of Peron has been political and economic instability, which partially accounts for the fall of Argentina from the top ten of income per capita countries in the world. Read more...(PDF)

Did Senator Gregg really intend to self-indict conservatives in our time and country by comparing today's populist anger to Argentinian populist anger?

There are many, many parallels between Argentine conservatives of the 1930s and American conservatives of today. None of them are complimentary and all of them imply a severe indictment on the corruption, money and greed that seems to drive conservative legislators.

What really stands out, though, is the utter cynicism of a conservative senator criticizing populist anger while his party is spending millions upon millions to capitalize on that same populist anger.