A deeper look at Obama regulatory reform

The Washington Post notes that President Barack Obama’s proposed financial regulation reform has five main points:

The proposals would greatly increase the power of the Federal Reserve, creating stronger and more consistent oversight of the largest financial firms.

It also asks Congress to authorize the government for the first time to dismantle large firms that fall into trouble, avoiding a chaotic collapse that could disrupt the economy.

Federal oversight would be extended to dark corners of the financial markets, imposing new rules on trading in complex derivatives and securities built from mortgage loans.

The government would create a new agency to protect consumers of mortgages, credit cards and other financial products.

And the administration would increase its coordination with other nations to prevent businesses from migrating to less regulated venues.

You can go to the story, read further, and see how the Post unpacks this all, but let me give you my take first.

1. More power to the Fed? The agency that always claims it’s a private entity when Fed chairmen go before Congress? The agency whose regional banks ARE private entities, as Tim Geithner so “ably” demonstrated as NY Fed head, fiddling while his best buddies burned the financial sector? No, and no thanks.

2. Congress to dismantle large firms? The same ones that give Members of Congress large financial contributions? Ain’t gonna happen, to quote Poppy Bush. Besides, Congress has already got some of this power. Right now, it could force Geithner to go the “bad bank” route on TARP etc., if it wanted to, but it hasn’t. Beyond the Congressional hog trough, it’s called “presidentialism.”

3. Federal oversight in dark corners? Theoretically, federal agencies could already have been doing more of this on their own. And, regulate derivatives? We’ll see the fine print and loopholes in final regulation.

4. New agency for mortgages, etc.? Again, per point No. 3, NOT NEEDED. Instead, in good neolib style with the particular Obama twist, we get new regulatory alphabet soup rather than using existing tools. And, somewhere at the bottom of the hay and shit piles, there’s not a Reagan pony, but another Obama czar on this baby.

5. More coordination with other nations? When it has dragged its feet on the European Union calling for tighter financial regulation this spring? Hah!

Don’t believe we will get real regulation tightening out of this baby.

Oh, and The One claiming speed is important? Why, so Congress doesn’t look more closely? Will this be another bill whose final version is NOT placed on the WH website before you sign it?