- When politicians plan reform, it's wise to be skeptical
and hold on to your wallets. So fixing the economy by bailing out Wall
Street is wrecking it, and Obama's proposed health care reform taxes more,
provides less, places profits above human need, avoids the most vital solutions,
and leaves a broken system in place.
- Now there's "Financial Regulatory Reform, A New
Foundation: Rebuilding Financial Supervision and Regulation" - announced
June 17 with Obama saying he'll send Congress a plan to create new government
agencies, give the private banking cartel Federal Reserve more power, and
address five major problems needing regulatory and legislative measures
- Addressing business executives in the White House East
Room, he said:
- "A culture of irresponsibility took root from Wall
Street to Washington to Main Street" with no mention that months of
it worsened on his watch. "A regulatory regime basically crafted in
the wake of a 20th century economic crisis - the Great Depression - was
overwhelmed by the speed, scope and sophistication of a 21st century global
economy." In fact, 30 years of deregulation since the late 1970s,
not technology, caused speculative excesses, market bubbles, and inevitable
collapses that always follow.
- Of course, these problems are endemic under a system
that's crisis-prone, unstable, anarchic, ungovernable, and self-destructive
through repeated cycles of booms creating bubbles, then busts, followed
by recessions or depressions with today's collapse grave enough for Michel
Chossudovky to call it "far more serious than the Great Depression
(because all) major sectors of the global economy are affected."
- Proposed Financial Reforms
- An 89-page Treasury Department pdf is available online
for those inclined to read it. Along with an introduction and summary of
recommendations, its five major objectives are to:
- I. "Promote Robust Supervision and Regulation of
- II. Establish Comprehensive Regulation of Financial Markets
- III. Protect Consumers and Investors from Financial Abuse
- IV. Provide the Government with the Tools it Needs to
Manage Financial Crises (and)
- V. Raise International Regulatory Standards and Improve
- The introduction cites "the most severe financial
crisis since the Great Depression," admits that its "roots....go
back decades (and states that) the government could have done more to prevent
many of" them. Proposed reforms include:
- -- a new regulatory "Financial Services Oversight
- -- more power to the Fed over "all firms that could
pose a threat to financial stability, even those that do not own banks"
such as insurance companies;
- -- stronger capital standards for all financial firms;
- -- a new "National Bank Supervisor" over all
federally chartered banks;
- -- registering hedge fund advisors;
- -- new regulation of securitization and derivatives markets;
- -- increased market transparency and the effectiveness
of credit ratings agencies;
- -- originators of loans packaged into securities to retain
some of the credit risk;
- -- broker and loan originator compensation changes away
from income up front to spreading it out over time and making it dependent
on the performance of loans they make;
- -- a new "Consumer Financial Protection Agency"
to safeguard them from potentially harmful complex financial products,
including securities, mortgages and credit cards;
- -- "stronger regulations to improve the transparency,
fairness, and appropriateness of consumer and investor products and services;"
- -- new ways to "resolve nonbank financial institutions
whose failure could have serious systemic effects;"
- -- changing the Fed's "emergency lending authority
to improve accountability;"
- -- establishing "wind down" authority to take
over large financial firms like AIG, Fannie and Freddie; and
- -- international reforms, including greater oversight
of global financial markets and more control through a process whereby
G-20 countries cooperate in regulating transnational companies. This looks
like the most insidious, outlandish, and dangerous provision. More on it
below and its likely importance.
- The report suggests other proposals may follow and that
"More can and should be done in the future." So what to make
of it all given that it's still a plan, congressional and other critics
are attacking some of its provisions, whatever emerges is still a ways
off, and large banks, insurers and other influential financial firms have
final say on new laws and regulations affecting them, so likely changes
coming may further taint an already deeply corrupted system.
- America has a legacy of failed public agencies as well
as regulatory and legislative reform - for lack of teeth, oversight, and
most important because financial and other industries end up self-regulating,
consolidating, and growing more powerful at the expense of the public interest.
Giving the Federal Reserve more power lets banking giants make their own
rules, decide how and whether to enforce them, and thus mainly operate
as they wish because no one in Washington dares challenge them.
- Michael Hudson agrees in his new article titled: "Instead
of Real Financial Reform, Obama's Plan capitulates to Wall Street."
He explains that supposed reforms promote "Wall Street's 'product,'
debt creation, at the expense of the economy at large, and lets financial
chieftains continue to self-regulate the debt industry - and by the way,
to keep all their gains from the past decade's worth of fraudulent lending,
scot-free....(He) achieved what no Republican could have: rescuing the
Bush administration's pro-creditor policies that fostered the Bubble Economy
in the first place."
- The plan is laden with a "false diagnosis"
and "fatal flaws," so clearly what's proposed are "wrong-headed
cures (but hardly) by accident." If it's largely accepted as is, Wall
Street will get precisely what it wants - a veneer of regulatory cover
to keep wrecking the economy and stealing the public blind.
- Simon Johnson is also critical. He's a former IMF chief
economist, now teaching at MIT's Sloan School of Management. After reviewing
Obama's plan, he expressed great skepticism. Even though large banks and
other financial institutions caused the global crisis, no wrongdoing on
their part is cited nor are punitive measures proposed. He states:
- "There appears to be no mention that corporate governance
within these large banks failed totally. How on earth can you expect these
banks to operate in a responsible manner unless and until you address the
reckless manner in which they (a) compensate themselves, (b) destroy shareholder
value, and (c) treat boards of directors as toothless wonders? The profound
silence on this point from the administration - including some of our finest
economic, financial, and legal thinkers - is breathtaking...."
- "Based on what we see so far, there is little reason
to be encouraged. The reform process appears to have been captured at any
early stage - by design the lobbyists were let into the executive branch's
(planning process), so we don't even get to have a transparent debate or
to hear specious arguments about why we really need big banks."
- Johnson (like Hudson) added that financial giants are
pleased with Obama's plan, and why not. They or their lobbyists wrote it.
On June 16, even The New York Times suggested it in Stephen Labaton article
headlined: "Obama Sought a Range of Views on Finance Rules."
Over several weeks, "executives from an array of industries caught
up in the financial crisis came to Washington....to make their case for
how the new regulatory landscape should look. They came from big banks
and small ones, insurance companies, stock exchanges, hedge funds and mutual
funds" as well as consumer groups and labor for appearance sake only.
- "Now lobbyists....will head to Congress to try to
influence the final product" with no doubt they will so once again
consumer interests will be shortchanged - perhaps globally given events
reported earlier this year and discussed below.
- Steps Toward Global Money and Banking Control
- In her April 18, 2009 article titled "The Tower
of Basel: Do We Really Want the Bank for International Settlements Issuing
Our Global Currency," Ellen Brown quoted Ambrose Evans-Pritchard in
the London Telegraph (April 7) saying:
- On April 2, "A single clause in Point 19 of the
communique issued by the G-20 leaders amounts to a revolution in the global
- "We have agreed to support a general SDR allocation
which will inject $250 (billion) into the world economy and increase global
liquidity...SDRs are Special Drawing Rights, a synthetic paper currency
issued by the International Monetary Fund that has lain dormant for half
- "In effect, the G-20 leaders have activated the
IMF's power to create money and begin global 'quantitative easing.' In
doing so, they are putting a de facto world currency into play. It is outside
the control of any sovereign body."
- Brown agrees and highlighted the article's subtitle:
"The world is a step closer to a global currency, backed by a global
central bank, running monetary policy for all humanity." What might
it be, she asked? The Bank of International Settlements (BIS) - the secretive
55-member nation, central bank of central bankers. Based in Basel, Switzerland,
it's run by the monetary authorities of six dominant nations - America,
Germany, Switzerland, Italy, Japan and Britain.
- Objective V in Obama's financial reform plan addresses
"Rais(ing) International Standards and Improving International Cooperation"
by promoting global control in a single paragraph:
- "The United States is playing a strong leadership
role in efforts to coordinate international policy through the G-20, the
Financial Stability Board, and the Basel Committee on Banking Supervision.
We will use our leadership position in the international community to promote
(an) initiative compatible with the domestic regulatory reforms described
in this report."
- Near the end of the plan, it recommends "Strengthen(ing)
the Financial Stability Board....complet(ing) its restructuring and institutionaliz(ing)
its new mandate to promote global financial stability by September 2009."
It also urges "work(ing) with the Bank for International Settlements
(BIS) and standard setters to develop macroprudential tools" with
Obama asking other nations to follow America's lead.
- What is the FSB, and why is it important?
- The Financial Stability Forum (FSF) Becomes the Financial
Stability Board (FSB)
- Founded at a Bonn, Germany meeting in 1999 when Bundesbank
president, Hans Tietmeyer, recommend it to G-7 finance ministers and central
bank governors, the FSF consists of central bankers and finance ministers
of about a dozen key nations working together for their mutual self-interest.
- A decade later at the G-20's April 2 London Summit, these
nations agreed to let a new Financial Stability Board (FSB) regulate their
economies henceforth as stated in a concluding communique:
- "In particular we agree:
- -- to establish a new Financial Stability Board (FSB)
with a strengthened mandate, as a successor to the Financial Stability
Forum (FSF), including all G-20 countries, FSF members, Spain, and the
- -- that the FSB should collaborate with the IMF to provide
early warning of macroeconomic and financial risks and the actions needed
to address them; (and)
- -- to extend regulation and oversight to all systemically
important financial institutions, instruments and markets."
- The G-20's same day's press release headlined: "Financial
Stability Forum re-established as the Financial Stability Board (with an)
expanded membership (and) a broadened mandate to promote financial stability."
- It "consists of a Chairperson, a Steering Committee,
the Plenary with member countries, SSBs (standard setting bodies) and international
financial institutions, and a Secretariat. The Chair oversees the Steering
Committee, the Plenary and the Secretariat. The FSB Plenary is the decision
making organ of the FSB." It has a "full-time Secretary General
and an enlarged Secretariat based in Basel (to) support the FSB."
Membership also obligates countries to "implement international financial
standards (including 12 International Standards and Codes)...." with
no elaboration about them except in broad terms left for outsiders to imagine
- Plenary members include G-20 nations, Spain and the European
Commission - represented by their central bankers, immediate deputies,
heads of their main regulatory agency, deputy finance ministers, SSB chairs,
central bank committees, and representatives of the IMF, World Bank, BIS
and OECD - together the world's monetary movers and shakers.
- The FSB appears to be a step closer toward global monetary
control under the direction of the G-7 dominated BIS, IMF and other international
lending agencies. Given its inclusion in Obama's financial reform proposal
makes the entire package suspect and perhaps just cover for the above-outlined
sinister scheme - as well as letting Wall Street be self-regulating.
- In her June 21 article titled "Big Brother in Basel:
Have We Traded Our National Sovereignty for Financial Stability,"
Ellen Brown cites Internet rumors "that the new agency benignly called
the Financial Stability Board (FSB) is the latest sinister development
in the covert consolidation of global financial power in a few private
hands," - namely dominant G-7 central bankers controlling the BIS,
IMF, and other international lending agencies.
- She and this writer believe that Orwell was "25
Years Too Early," but might not have imagined the scenario now playing
out as a way to "pull off a private global dictatorship (by): (1)
creat(ing) a global crisis; (2) appoint(ing) an 'advisory body' to retain
and maintain 'stability;' and (3) 'formaliz(ing)' the advisory body as
global regulator" - supposedly to fix a broken system but in fact
to be a "bloodless coup" with the public none the wiser until
it's too late.
- So far, there's still time to prevent it provided enough
concerned people know the danger, spread the word to others, and urge them
to pass it on. Otherwise, holding on to your wallets won't matter because
everything in them will be emptied the result of (banker-controlled) regulatory
bodies pulling off the greatest ever financial heist - a global coup d'etat.
The time to stop it is now and expose Obama as a frontman for grand theft
- Stephen Lendman is a Research Associate of the Centre
for Research on Globalization. He lives in Chicago and can be reached at
- Also visit his blog site at sjlendman.blogspot.com and
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