"Financial Reform" Virtually Useless

ConsortiumNews.com:

US Staggers Toward Dysfunction

Danny Schechter
August 14, 2010

[. . .]

The private sector is not creating jobs. The GOP is blocking the government from doing more stimulus programs while the system seems to be unraveling.

All the talk of cutting deficits by conservatives or ending tax cuts by liberals will not give the economy the boost it needs. There is a paralysis of analysis and a stalemate.

The markets were more freaked by the recent pessimism oozing from the Fed than any partisan punditry. The slowdown they are worried about has already doomed any heavily-hyped “recovery.”

And the public knows it, according to the recent polls.

What’s worse is that the tea leaves offer few signs of a turnaround any time soon even if General Motors is selling more cars — many, may we be reminded, in China.

(The GM CEO who last week took a nasty ingrate smack at GM being perceived as “Government Motors,” demanding the government sell all of its shares, has just announced he is leaving! I wonder why?)

The Carlyle Group is taking over while the automaker launches a new program of subprime lending, the very predatory deal-making that got them in trouble in the first place.

Does anyone ever learn from history, or care about how communities are being destroyed as a financial crisis becomes a social crisis at the grassroots level?

Check out what happened at that mall in Atlanta where thousands of people nearly rioted to get on a public housing waiting list.

The Congress returned from its recess to pass new monies to keep teachers teaching and cops patrolling. They did so by slashing food stamps so the unemployed and poor will have to cut back further.

What a trade-off.

As for insuring the stability of an increasingly volatile system, will the new financial reforms make any difference? It doesn’t look like it.

The New York Times reported, “As Wall Street scrambles to find the best and most profitable way to operate under the new financial reform law, Goldman Sachs Group Inc. — the firm that was expected to suffer the most under the legislation — could emerge practically unscathed.”

"We think we are well positioned to be a market leader under the new rules,” Jack McCabe, co-head of Goldman's derivatives clearing service business, was quoted as saying.

As for the law’s effect on Goldman, Richard Bove, a bank analyst at Rochdale Securities, said he had changed his view.

"I thought this company was going to be really harmed by this bill; now I've figured out that it's not going to happen," he said. "They should win big here."

That’s Goldman’s reason to celebrate its “big win” What about the others?

The truth is we will not know for a awhile, for a long while, for many, many years. So much for any sense of urgency even after former Federal Reserve Chairman Paul Volcker said we are running out of time.

Bloomberg News explained why

“Many of the measures ordered by Congress and global regulators, aimed at cushioning the financial system in future crises, are years away from being implemented. The Basel Committee on Banking Supervision plans to give the world’s banks until 2018 to comply with limits on how much they can borrow.

“Parts of the Volcker rule, a provision of the new Dodd-Frank Act that would force firms to cut stakes in in-house hedge funds and private-equity units, may not go into effect for a dozen years.”

“Based on our experience of government’s ability to execute these things effectively and in a timely way, we are almost uncovered now from any future financial risk for at least another 8 or 10 years, and that’s a little scary,” said Roy Smith, finance professor at New York University’s Stern School of Business and a former banker at Goldman Sachs Group Inc.

Economist Nouriel Roubini, one of the first to forecast our crisis, worries that major economies in Europe are at risk and could fall.

At the same time I am reading articles that contend, “The US is more bankrupt than Greece.” Another reports the IMF saying the US is bankrupt but most Americans don’t know it.

What else don’t we know?

At the same time, the folks who brought us this crisis are still riding high, making multi-million dollar “settlements” to cover up fraudulent practices. In recent weeks, Goldman Sachs, Countrywide and, now, Wells Fargo have just done that in part to avoid prosecutions.

Their CEOS are going on vacation to spend their ill-gotten gains, not to jail to pay for their crimes. And the “professional left” — whatever that is supposed to be – is more pissed at Robert Gibbs blathering at that podium than the banksters maneuvering behind the scenes.

Can anyone tell me what’s wrong with this picture?