I’m at a loss for all of the big news that has happened this week. If you take a step back, Scott Brown’s win really is monumental and is what is I perceive to be a watershed event for 2010. Just look at what has happened in a couple of days.
1) Scott Brown was amazingly elected.
2) The President’s signature agenda item of a health care is dead in its current form, potentially even relegated to the back burner depending upon the posture Democrats take in the coming weeks.
3) The utter chaos and infighting that has erupted within the ranks on the left.
4) The President has hardened his stance against the big banks.
5) Questions of reconfirming Ben Bernanke as Chairman of the Federal Reserve.
There is no way I can’t comment about the above fallout from the Scott Brown victory. Interestingly, this has created a need for politicians on the left to move to a populist stance and switch from focusing on health care to focusing on bank regulation/punishment. The President himself has been talking about measures to effectively tax the big banks for their hand in the financial crisis. Now he’s upped his rhetoric and looks to put them even further through the wringer because it fits the populist message. Congress is heaping on if they toss Bernanke out on his ass. Mark my words, markets will roil.
I say go for it. Send the market a message. Stick it to Wall Street and then break it off. Its time for Main Street to have a place at the table too.
Make the banks literally have to pay for their illicit ways. Make them pay for all the debt the US Government has had to directly take on plus interest, for the collateral damage it has caused. Pass the tax that the President proposes, but but go further. Make it larger than .15% and make it permanent. Then, re-enact the Glass-Steagall Act. Finally, enforce the Sherman and Clayton Acts and break these banks up. We don’t need any more new laws, we have enough already. Simply enforce the ones we’ve got.
The argument against all this proactive action? The banks will just pass it on to consumers. The ubiquitous ‘they’ (those guys keep getting mentioned in my blog) realize that it is okay to make the guilty corporations pay for their transgressions, but they say we shouldn’t because the banks will simply pass the cost on to their customers. ‘ They’ also say that the action will cause the best minds in the industry to flee these corporations and go elsewhere; making US markets less competitive. For those that flee, I say ‘good-riddance’. We don’t need their creative-financing our my economy to begin with. We see how well that worked out… Secondly, don’t give these ‘best minds’ anywhere to go. Work with the international community (most notably the U.K.) to enact similar laws in their countries so it is an even playing field and the chicanery dies once and for all. Lastly, and most importantly, just write into the new tax specific wording and enforcement that states that the costs cannot be passed on to the consumer. Audit these now much smaller banks every quarter with a fine-tooth comb. They won’t be able to pass the costs on.
Now was it that hard? I wish we could let the market be freer so government did not have to play such a role, but such is not the case. Hence, the government’s role needs to be effective and defined. I’m not for more regulation, but I am for justice and the enforcement of good laws because they are unfortunately needed. Glass-Steagal is one of those. I don’t oppose government and the rule-of-law. I just oppose inefficient government, bad laws, and injustice. I believe that every American can support that.
P.S. – there is more in Part II. Take a break, get some water, stretch, and I’ll see you below.