Friday, April 23, 2010

Government Agency and Regulation Are an Existential Need

It was March 1, 1872, when President Ulysses S. Grant signed a bill that made Yellowstone Park the first national park. An act that created a new federal agency that has evolved into what is today our national park system.

Ken Burns’s film, "The National Parks: America's Best Idea" exposed how the parks would have become the prey of profiteers without a National Park Service mandated to regulate, protect, and manage their use.

If the United States had the same concern as they have had for protecting our National Parks, Main Street and the broader economy would have been protected against the predatory profiteers of Wall Street, and the Glass–Steagall Act of 1933 and its regulations would still be in place.

Inexplicably and to the dismay of many, on November 12, 1999, Glass–Steagall was repealed when Democratic President Bill Clinton signed the repeal legislation into law. However, the repeal legislation of Glass–Steagall was introduced in the Senate by Texas Republican Phil Gramm and in the House of Representatives by Iowa Republican Jim Leach, and the Republican majority passed the legislation.

On September 24, 2008, republican John McCain announced he would suspend his presidential campaign and that he would be “racing back to Washington” to participate in the 700 billion financial bailout negotiations in reaction to the severe financial meltdown that erupted.

The reason the financial markets plummeted, making a financial bailout necessary, was that regulation and supervision of the banking system failed due to lack of disclosure that would ensure market discipline, lack of adequate capital, lack of effective oversight and supervision.

Alan Greenspan and the Federal Reserve were under the mindset that the free market could regulate itself, which later he admitted was wrong.

As with healthcare legislation, the Republican Party has opposed financial reform, fighting tooth and nail against the democrats’ legislative effort; albeit, as of this writing, republicans have been easing their stance, apparently because they have recognized that it’s not in their political best interest to do so.

Republican Scott Brown, the new Senator from Massachusetts, on Face The Nation, gave an inadequate response in expressing his reasons for objecting to the proposed financial reforms.

As with the healthcare bill, he said, he is prepared to be the 41st vote to kill the financial reform bill and that he would support a filibuster, although interested in being the 60th vote to approve a measure if senators start from scratch. To his word, he signed on with other Senate Republicans in a letter vowing to oppose the bill unless it is changed.

He said, like many others in my state and throughout the country, he wants “banks to be banks.” “I don’t want them to be casinos and take risky bets on our money.”

I don’t understand, Senator! Isn’t that what the financial reform bill is designed to do?

He claimed the bill would cost 25,000 to 35,000 Massachusetts jobs, while the company who gave him the figures said they provided Brown with no such estimate. Company officials explained that they had given Brown an estimate of how many jobs have been lost in the Massachusetts financial sector since the recession.

An economist interviewed by the Boston Globe said the financial reform bill would likely not affect financial sector jobs either way.

Just like the agency and regulation put into place to protect and preserve our national parks, we need an agency and regulation put into place to protect investors and consumers from a future catastrophic economic collapse and to preserve our financial infrastructure.