Obama's Financial Reforms: Five Reasons Why They Are Likely to Fail

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At the risk of sounding negative, this article really spells out what the current plan fails to address.

Obama's Financial Reforms: Five Reasons Why They Are Likely to Fail
by Les Leopold (author:The Looting of America) directs the Labor Inst/Public Health Inst. NY
Posted on Huffington Post - June 18, 2009 12:04 PM

The Obama Administration has put together a wide-ranging set of reforms that attempts to re-regulate the financial sector...But these measures are unlikely to prevent the next meltdown because they do not address the root causes.

1. The financial sector is bloated and will remain so...To reshape the economy would require two policies that the Administration wants to avoid: wage caps on executives throughout the sector and taxes on all financial transactions (see number 5 below).
2. Financial institutions that are Too Big To Fail will still be Too Big To Fail.
3. The derivative casino is still open for business...
4. The wealthy have too much and therefore the demand for fantasy finance gambling will continue. You can regulate the Wall Street casinos all you want but if there is too much surplus capital around, new casino games and asset bubbles will be created. Demand will create Supply. (Hasn't Obama learned anything from the failure of the "Drug War"?) The casinos were created because we encouraged an enormous amount of wealth to accumulate in the hands of the few...

The money didn't trickle down. When the wealthiest few ran out of easy investments in the real economy, they turned to Wall Street's fantasy finance casinos. The new proposals do nothing to address the wage/income disparities that feed the demand for bubble assets.

5. The proposed regulations don't pay us back...

I hope that history will prove me wrong. I don't want to see more suffering and I would like the Obama administration to succeed. But history is a very cruel teacher, especially when we don't listen And right now it is screaming at us to dramatically reduce the size and influence of the financial sector, and to fundamentally address the obscene and systemically dangerous concentration of wealth in too few hands.

More at
http://www.huffingtonpost.com/les-leopold/obamas-financial-reforms_b_217375.html

[xchrom]

1. have we done aything truly significant to change

The Financials, their power, their access to power, and their ability to affect the national economy?

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3. It doesn't appear that we have

I still don't know how the Powers That Be think that we can continue as we have without at least a base of Americans, of modest means, who are able to prosper and help keep the economy going. If we have no money to spend, how can we support the businesses that still exist, after all is said and done? It doesn't make sense.

THEY don't get it.

[mullard12ax7]

2. Excellent analysis

How many times have we as America citizens seen the government come up with some re-org or some new committees without changing a thing?

Answer: Every time.

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4. Some interesting comments accompanying this article

from one reader on HuffPo:

If you are paying any attention at all to the looting of America's middle class, you should by now understand there are at least six reforms that need to be undertaken.

1. The 5 former investment banks and AIG need to be put into receivorship and broken up. By keeping them too big to fail, we are growing them into to big to save, which means catastrophic collapse the next time, and history teaches there will be a next time.

2. Every person who was involved at those institutions and everyone above them needs to be fired. A message to the financial sector. We may have to bail them out, but no more corporate welfare.

3. The rating agencies need some stiff punishment. They sold us out for money.

4. Credit Default Swaps need to be treated like the insurance product they are. That means reserves.

5. Owner occupied home mortgages need to be taken out of the hands of Wall Street gamblers. This is the single biggest asset most Americans will ever own. It should not be a gambling chit for greedy market speculators. Fannie Mae and Freddie Mac can take them over.

6. How about a middle class bailout? Owner occupied home mortgages need to be lowered to 3%. That will save the middle class and free up enough capital to jump start America's economy.

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5. **Light bulb** I just realized something he said!

(Sorry to keep posting on my own thread, but this just jumped out at me)

Leopold said:

"The money didn't trickle down. When the wealthiest few ran out of easy investments in the real economy, they turned to Wall Street's fantasy finance casinos...it is screaming at us to dramatically reduce the size and influence of the financial sector, and to fundamentally address the obscene and systemically dangerous concentration of wealth in too few hands."

I think most of us already know that tax cuts for the wealthy are a hoax and have been a huge a drain on the economy. But Leopold is at least implying that they helped to cause this economic situation because all that extra cash was "play money" leading to speculation in Wall Street's "fantasy finance casinos". And I think he's saying that it's going to happen again if this doesn't change.

Wake up Obama, Congress, and America!!