Bush-McSame Republican Regime and its Flunkies Responsible for US Financial Debacle

Progressive Democrats and economists have been saying this for a long time.  However, it is with little satisfaction but righteous anger that we say "We told you so!" 
 
This nation did not heed the warnings and kept bowing to the Republican Party and this administration's manta: deregulation, financial institution self-regulation which began during the Reagan years and continued with a vengeance under the Bush regime.
 
Now that the cow pies have hit the fan, Republicans are demanding no fingers be pointed at the culprits, which include the Bush administration and its Republican rubber stamp supporters in Congress.
 
In fact, the House Republicans have come up with an Orwellian alternative plan for this Wall Street debacle, a plan that caused this financial debacle in the first place. 
 
From ThinkProgress: "Yesterday, negotiations over the $700 billion federal bailout imploded after House Republicans, led by Rep. Eric Cantor (R-VA) and Rep. John Boehner (R-OH) circulated an alternative plan that "advocates tax cuts and relaxed regulations."

"This is the second alternative plan offered by conservatives. This week, the Republican Study Committee (RSC) released its own plan, which is also being supported by former Speaker of the House Newt Gingrich.

"Both of these plans are fundamentally flawed, and fail to address the causes of the current financial crisis.

"The Boehner/Cantor Plan, among other provisions, calls for the removal of "burdensome regulatory and tax barriers" to pull capital into the market:

Instead of injecting taxpayer funds into the market to produce liquidity, private capital can be drawn into the market by removing burdensome regulatory and tax barriers that are currently blocking private capital formation. In short, too much private capital is sitting on the sidelines during this crisis, and it is well past time to unleash it.

"This plan is essentially a non-starter. It doesn't address the underlying problems in the mortgage market by allowing any restructuring of bad mortgages. Also, the plan's provision to "insure mortgage backed securities (MBS) through payment of insurance premiums is "akin to selling homeowners insurance in New Orleansafter the dikes broke." Only those financial institutions with the very worst assets would be willing to participate.

"Cantor has admitted his plan has a problem, and said "he would support giving the Treasury secretary some authority to purchase the most troubled securities linked to failing mortgages" because some of the "exotic sliced and diced" mortgage-backed securities at issue for the financial institutions are of such little value." But the plan still does nothing to restructure the "sliced and diced" mortgages.

"For its part, the RSC proposed cutting the capital gains tax to zero and privatizing Fannie Mae and Freddie Mac, in a "market based alternative" to the bailout. The RSC solution also calls for the suspension of mark-to-market accounting.

"As previously noted on the Wonk Room, zeroing the capital gains tax would mostly benefit the wealthy and not draw capital into the market. Meanwhile, privatizing Fannie and Freddie incorrectly places the blame for the crisis on the GSE's alone. While Fannie and Freddie did invest in bad mortgages, Bush administration regulators failed to prevent such practices.

"Moreover, the collapse of Fannie and Freddie "was patently not the beginning of the latest leg of this crisis." Instead, that honor belongs to the unregulated credit default swaps issued by insurance giant AIG that AIG subsequently couldn't back up. The elimination of mark-to-market accounting would simply allow U.S. financial institutions to continue pretending that their bad assets are good, which would not fix the underlying problem of toxic mortgages pervading the market.

"All in all, the conservatives have proposed deregulation to get the U.S. out of a problem caused by deregulation - with some tax cuts for the wealthy thrown in as a bonus."

And the failed, Bush loyalist, polticized SEC, tries to close the barn door after the horses are out.

The NYTimes reports"The chairman of the Securities and Exchange Commission, a longtime proponent of deregulation, acknowledged on Friday that failures in a voluntary supervision program for Wall Street's largest investment banks had contributed to the global financial crisis, and he abruptly shut the program down.

"The S.E.C.'s oversight responsibilities will largely shift to the Federal Reserve, though the commission will continue to oversee the brokerage units of investment banks.

"Also Friday, the S.E.C.'s inspector general released a report strongly criticizing the agency's performance in monitoring Bear Stearns before it collapsed in March.Christopher Cox, the commission chairman, said he agreed that the oversight program was "fundamentally flawed from the beginning."

“ 'The last six months have made it abundantly clear that voluntary regulation does not work,' he said in a statement. The program “was fundamentally flawed from the beginning, because investment banks could opt in or out of supervision voluntarily. The fact that investment bank holding companies could withdraw from this voluntary supervision at their discretion diminished the perceived mandate" of the program, and "weakened its effectiveness," he added.

"Mr. Cox and other regulators, including Ben S. Bernanke, the Federal Reserve chairman, and Henry M. Paulson Jr., the Treasury secretary, have acknowledged general regulatory failures over the last year. Mr. Cox's statement on Friday, however, went beyond that by blaming a specific program for the financial crisis” and then ending it.

"On one level, the commission's decision to end the regulatory program was somewhat academic, because the five biggest independent Wall Street firms have all disappeared.

"Still, the inspector general's report made a series of recommendations for the commission and the Federal Reserve that could ultimately reshape how the nation's largest financial institutions are regulated. The report recommended, for instance, that the commission and the Fed consider tighter limits on borrowing by the companies to reduce their heavy debt loads and risky investing practices.

"The report found that the S.E.C. division that oversees trading and markets had failed to update the rules of the program and was "not fulfilling its obligations." It said that nearly one-third of the firms under supervision had failed to file the required documents. And it found that the division had not adequately reviewed many of the filings made by other firms."

The departments and agencies under the criminal Bush regime have made a mockery of effective government and the Bushite loyalist flunkies enforce a Bushite unconstitutional policy of government of, by and for the rich, corporations and Wall Street, the hell with the common good.

And impeachement is still off the table.

 

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