Taxmageddon 2013: Dodd-Frank

“We’ve got to keep moving forward” – President Obama, Weekly Address, 5/19/2012

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.

Conclusions

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.

Advertisements

About azleader

Learning to see life more clearly... one image at a time!

Posted on May 23, 2012, in 2012 Elections, Barack Obama, Business, Congress, culture, economics, Life, news, Opinion, Politics. Bookmark the permalink. 2 Comments.

  1. The same day that President Obama criticized Romney for running a Vulture Hedge Fund, he flew up to NYCity to attend two fund raising events, one of which was at the house of the BlackRock? or BlackStone? Hedge Fund CEO where dozens of folks were paying $35,000 a piece to some Super Pac supporting Obama.

    The current Democrat Party is completely corrupted by the Wall Street forces that Jefferson and Jackson must be sick up in heaven. Dodd Frank was written to go into effect the sooner of July 2012 or rules being posted early. The Obama administration in January extended the Dodd Frank comment period, and then set aside the Congressional implementation date of July 2012 to sometime in 2014 or later. So, President Obama is letting Wall Street play its ongoing games. I do not want to leave the impression that the Republicans are any different; the current Congress is looking for all kinds of ways to prevent Dodd Frank from going into action. Meanwhile we should be thankful that JPMorganChase only lost $2-$5billion and not the $1trillion AIG could have caused.

    Wall Street runs America, both parties completely. We have the best system that Wall Street money can buy.

    Bring back Glass Steagal for sure, as well as another law that FDR pushed, the 90% bonus tax on companies bailed out by the US government in 1935. In February 2009 the Congress passed such a bonus tax of 90% on Executives of TARP bailed out companies by a vote of 350 to 85. I forgot the House Bill designation. At President Obama’s suggestion he had the Senate and Conference Committee drop the bonus tax on the millionaires. Yep President Obama actually had his chance to tax the millionaires, and did nothing. President Obama said something to the effect “he did not want to govern negatively.” This President will say whatever is convenient on the Wall Street topic, but actually force it to happen, forget it.

    If Romney becomes President, he may do the same as Obama and Wall Street will rule the roost. Or, Romney could play the TR Roosevelt card and crack down hard on the casino capitalism of a crooked Wall Street.

    We just have to wait for all the Acts of this 21st Century Play to play out. Nice job. Good story and conclusion, and it keeps putting the pressure on. Regular folks realize Wall Street needs policing.

    • Its true that Wall Street has more corrupting influence on government than it should. Its true it comes mostly through campaign donations.

      Wall Street plays both sides of the political street. Republicans and Democrats allow it so they equally shoulder the blame.

Comments and questions are welcomed!

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: