Taxmageddon 2013: Dodd-Frank
Taxmageddon 2013 is symptomatic of a much greater cancer growing on the U.S. economy.
Taxmageddon 2013 is bigger than the largest tax increase in U.S. history… a $3,000 a year tax mountain facing the average American at the end of this year.
Like the Watergate scandal grew into more than just the break-in of the DNC headquarters in June 1972, taxmageddon is more than just a tax increase in January 2013.
One symptom of the growing economic cancer is the Dodd-Frank Wall Street Reform Act of 2010. It was supposed to fix what caused the Great Recession of 2008 that we still suffer from today. It doesn’t.
Though Dodd-Frank was signed into law two years ago, JPMorgan’s $2 billion+ investment loss proves Wall Street is still broken. It is yet another twist in the ongoing, entirely preventable taxmageddon saga.
President Obama on Wall Street Reform
In last Saturday’s weekly address, “Congress Must Move Forward, Not Back on Wall Street Reform“, President Obama warned Congress against tinkering with Dodd-Frank.
Speaking of the economic collapse of 2008 and reform, the President said this:
we’ve put in place Wall Street reform with smarter, tougher, commonsense rules that serve one primary purpose: to prevent a crisis like that from ever happening again.
unless you run a financial institution whose business model is built on cheating consumers… you have nothing to fear from Wall Street reform.
– President Obama, Weekly Address, 5/19/2012
Dodd-Frank is neither smarter, tougher nor more commonsense than the Glass-Steagall provision it is intended to replace. That provision simply prohibits banks from making speculative investments with taxpayer insured depositor funds.
For sure, Dodd-Frank contains many good things. The President outlines them in his weekly address. However, virtually none of them would be necessary if the straightforward Glass-Steagall deterrence were reinstated.
Instead of prevention, Dodd-Frank replaces a simple Glass-Steagall provision with a set of regulations so staggering that they took two years to create and will take another two years of public comment and input before they are implemented in 2014.
Glass-Steagall protected Americans from both cheaters and honest mistakes. It punished no one for abuses. It didn’t have to. It prevented abuse entirely.
Dodd-Frank will generate unnecessary financial confusion over at least the next 2-year comment phase. A well intentioned process by the federal government unintentionally throws up yet another roadblock to investment, economic growth and recovery when we need them most.
Though indirectly, it’s a contributing factor why businesses sit on a burgeoning $2.5 trillion unused cashbox instead of investing it.
Dodd-Frank does not fix the problem. Another 2008-like collapse is inevitable. JPMorgan’s $2 billion+ loss is our wake-up call to bring back Glass-Steagall.
As it is now, Dodd-Frank has entwined itself within taxmageddon’s web-like Medusa’s head.
If not the mortgage housing bubble collapse, something else would have brought down Wall Street in 2008. Government trying to figure out what that might be and regulate it out existence will not work. Something unanticipated will bring down Wall Street again if Glass-Steagall is not returned.
As long as the big banks are allowed to make speculative investments with depositor money, we will remain in danger of total economic collapse. That is a greater danger to the U.S. economy than anything else in taxmageddon 2013.
Please, Mr. President, don’t just bend Dodd-Frank to fit your new “Forward” campaign slogan. More partisan politics is not what we need. Face reality and call on Congress to fix Dodd-Frank before we repeat 2008.
Its hard to move forward in a broken wagon.