Rich On Money

Secretary Timothy Geitner

It’s a good question. The bill now pending before Congress is being called the Doo-Frank financial reform bill. My answer is we do, but first we should have taken a look at the players involved in the banking crisis to begin with, to see whether quoting the Marines, they could have been all that they could be. The answer to this observer is that they did not get the job done, and they did HAVE THE POWER to do it.

The Federal Reserve Bank of New York had the power and has the power today to reign in a company like Citigroup. As we all know, the big bank had lending practices, and trading rooms whose tactics were questionable at the least, and downright stupid at best.

The biggest regulator in the government the Securities and Exchange Commission which controls the SEC Act of 1933 and 1934 had the power to make sure that there were reasonable liquidity rules in effect, and chose to do nothing about it. They certainly were asleep at the switch when it comes to the Madoff Scandal. Do you think it is any different now?

With the collapse of firms like Merrill, Bear Stearns, and Lehman Brothers it looks like too big to fail, just got too bigger to fail. These giant corporations just got a lot bigger with their absorption into other even bigger companies.

The Dodd-Frank bill creates a brand new Bureau of Consumer Financial Protection. It comes under the Fed, and it will be funded by the Fed. It’s going to contain hundreds of new intellectuals whose sole function will be to write brand new regulations for every financial service you can think of.

The Fed’s central function is to manage and imagine risks in the system. Clearly the Fed failed in this responsibility during the crisis. So now they are going to create an Office of Financial Research under the Treasury Department whose function will be to look into systemic risk, hopefully better than the Fed did to begin with. God bless our government and may God slow down the regulators before they create more damage than the damage they seek to stop.