ARRA News Service
ARRA News Service facebook page  
News for social, fiscal & national security conservatives who believe in God, family & the USA. Upholding the rights granted by God & guaranteed by the U.S. Constitution, traditional family values, "republican" principles / ideals, transparent & limited "smaller" government, free markets, lower taxes, due process of law, liberty & individual freedom. All content approval rests with the ARRA News Service Editor. Opinions are those of the authors. While varied positions are reported, beliefs & principles remain fixed. No revenue is generated for or by this site - no paid ads accepted - no payments for articles. Fair Use doctrine is posted & used.
Editor/Founder: Bill Smith, Ph.D. [aka: OzarkGuru & 2010 AFP National Blogger of the Year]
Contact: (Pub. Since July, 2006)
    Home Page

One of the penalties for refusing to participate in politics is that you end up being governed by your inferiors. -- Plato (429-347 BC)

Thursday, March 17, 2016

A $110 Billion Black Hole Explains the Sorry State of Financial Regulation

A Black Hole
by Sean Hackbarth, Contributing Author: A recent Wall Street Journal story epitomizes the sorry state of U.S. capital market regulation. Following the bursting of the housing bubble, regulators claimed nearly $110 billion in fines and settlements [subscription required] from financial institutions.

Where did the money go? WSJ reporters did their best Stephen Hawking impression and found that much of it fell into an unaccountable black hole [emphasis mine]:• The Treasury Department received almost $49 billion of the funds, including money the agency received directly and sums funneled to it by other departments, including government-chartered housing associations Fannie Mae and Freddie Mac. How the money is spent isn’t specified.

• About $45 billion was earmarked for “consumer relief,” a category that includes money dedicated to helping borrowers and funding housing-related community groups.

• The Justice Department, whose prosecutors led many of the negotiations with banks, collected at least $447 million. How it spends the money isn’t specified.

• States received more than $5.3 billion, usually to spend as they saw fit. Almost all states received payments from a national settlement in 2012 over mortgage-servicing abuses, and seven also received payments in the Justice Department’s blockbuster mortgage-securities settlements that started in 2013.

• Roughly $10 billion went to other recipients, including housing-related federal agencies, two federal agencies responsible for cleaning up failed banks or credit unions, and whistleblowers who helped the Justice Department. Some funds from these deals typically revert to the Treasury.
Fines that went to New York State government fund improving the New York State Fairgrounds' concert stage and horse barns.

In short: Billions of dollars went into a slush fund for government officials to spend as they wish and for politicians to earn good headlines for “doing something.”

While officials patted themselves on the back for satisfying a populist itch, they have created a complex financial regulatory monstrosity that saps energy from the U.S. economy and impedes economic growth.

Tom Donohue, U.S. Chamber president and CEO, spoke about financial regulation at the 10th Annual Capital Markets Summit:When we talk about capital markets, we are talking about banks, stock exchanges, bond markets, mutual funds, angel investors, venture capital, private equity, consumer financial products—any form of financing a business needs to grow and operate.

From the entrepreneur who is applying for a home equity loan, to an emerging growth company that is going to issue an IPO, to a multinational company seeking to execute a letter of credit for a trade deal—each relies on efficient capital markets.
Capital is the fuel of free enterprise, and capital markets pumps that fuel to the engine of economic growth.

When capital markets aren’t functioning well, new office space isn’t built; new factories aren’t built; tools and equipment to fill those offices and factories aren’t purchased; new stores aren’t opened; economic growth is constrained.

But when they are effectively moving capital to productive uses, capital markets spur innovation, job creation, and economic opportunity.

However, ever since the 2008 financial crisis, capital markets have been under siege by regulators, and financial companies have become political punching bags.

Said Donohue, “Many legislators, policymakers, and regulators, regardless of party or ideology, see our financial services providers as a problem to be solved, limited, and controlled—and not a key ingredient to boosting the economy.”

By building a regulatory regime on “a creaky foundation,” policymakers have trapped financial institutions in a “no-win regulatory, business, legal, and political environment,“ Donohue proclaimed:Too often they are told to lend, but also sock away more capital. They are asked to plan for a doomsday scenario, but aren’t allowed to manage cash for a business.

Increasingly, “political risk” and “regulatory risk” are replacing “credit risk” as a driver of what services banks and other financial intermediaries are able to provide.

In too many instances, rules are designed to cover regulators’ backs and not to promote a well regulated market.

As a result, financial service providers are afraid to launch new products because they are out of regulatory favor, or they stop offering existing products because compliance becomes too cumbersome or costly.
One example is the Labor Department’s attempt to reform fiduciary standards. Unless changes are made, the proposed retirement rule will hurt the middle class savers it’s intended to help. “If they don’t get the rule right, up to 9 million small business owners could stop providing retirement benefits to their employees,” said Donohue.

Business leaders experience these regulatory problems first-hand.

“The regulatory world has changed substantially,” said Walter Bettinger, Charles Schwab’s president and CEO, in an interview at the capital markets summit. Various federal agencies are “all trying to regulate the same thing at different times.” Staff is overwhelmed “in a perpetual cycle of serving the regulators.”

Under the expansive, regulation environment in place today, there would be “no possible way” to start a kind of business like Charles Schwab today, said Bettinger.

A rational, sensible financial regulatory environment can mean the difference between a low growth, low wage economy versus one that grows faster and produces more jobs and economic opportunity.

“If we get the policies right, then our capital markets are poised to provide capital to startups and businesses and to serve consumers,” Donohue explained.

The choice is ours.

What will the financial world be like in 2026? Read Finance Flash Forward — a collection of essays compiled by the U.S. Chamber of Commerce’s Center for Capital Markets Competitiveness.
Sean Hackbarth is a policy advocate and Senior Editor, Digital Content, at U.S Chamber of Commerce. He twitters at @seanhackbarth and is a contributing author at the ARRA News Service.

Tags: Sean Hackbarth, Chamber of Commerce, $110 Billion, regulators, fines and settlements,  Black Hole, Sorry State, financial regulations To share or post to your site, click on "Post Link". Please mention / link to the ARRA News Service. and "Like" Facebook Page - Thanks!
Posted by Bill Smith at 4:42 PM - Post Link


Post a Comment

<< Home

National Debt
Don't miss anything!
Subscribe to the
ARRA News Service
It's FREE & No Ads!

You will receive a verification email
& must validate you subscribed!

You Then Receive One Email Each AM
With Prior Days Articles / Toons / More

Also, Join us at:

Recent Posts:
Personal Tweets by the editor:
Dr. Bill - OzarkGuru - @arra
#Christian Conservative; Retired USAF & Grad Professor. Constitution NRA ProLife schoolchoice fairtax - Editor ARRA NEWS SERVICE. THANKS FOR FOLLOWING!

Action Links!
Arkansas State Senators
AR State Representatives
Arkansas Governor Office
Arkansas Attorney General
Bankrupting America
US House of Representatives
US Senators
Family Research Council
Sunshine Review

Facebook Accts - Dr. Bill Smith
ARRA News Service
Arkansans Against Big Government
Alley-White Am. Legion #52
Catholics & Protestants United Against Discrimination
End Taxpayer Funding of NPR
Overturn Roe V. Wade
Prolife Soldiers
Project Wildfire 4 Life
Republican Liberty Caucus of Arkansas
The Gold Standard
US Atty Gen Loretta Lynch, aka Eric Holder, Must Go
Veterans for Sarah Palin
Why Vote for Hillary (Satire)
FB Groups:
Arkansas For Sarah Palin
Arkansas Conservative Caucus
Arkansas County Tea Party
Arkansans' Discussion Group on National Issues
Blogs for Borders
Conservative Solutions
Conservative Voices
Defend Marriage -- Arkansas
FairTax Nation
Arkansas for FairTax
Friends of the TEA Party in Arkansas
Freedom Roundtable
Let's Mine AR Lignite NOW!
Pro-Life Rocks - Arkansas
Republican Network
Republican Liberty Caucus of AR
Reject the U.N.


Request Via
Article Comment

Links to ARRA News
A Patriotic Nurse
Agora Associates
a12iggymom's Blog
America, You Asked For It!
Americans for a Free Republic
America's Best Choice
America's Whatchtower
An Ol’ Broad’s Ramblings
ARRA Twitter
As A Matter of Fact
As The Crackerhead Crumbles
Baaad Media!
Black & Right
Blogs For Borders
Blogs for Palin
Blow the Trumpet Ministry
Boot Berryism
Cap'n Bob & the Damsel
Chicago Ray Report
Chuck Baldwin - links
Citizen Pamphleteer
Common Cents
Conservative Hideout
Conservative Observer AZ
Conservative Voices
Conway Real Deal
Defeat Obama's Agenda
Diana's Corner
eGOP News
Florida Pundit
Franklin Online Outreach
Freedom For US Now
Free Zone Media Center
For God and Liberty
Garland County Republicans
Greater Fitchburg For Life
Guns and Religion
Lasting Liberty Blog
Liberal Isn't Amy
Liberty's Lifeline
Maggie's Notebook
Marathon Pundit
Monkey in the Middle
NASA Satellites
No Runny Eggs
Okie Campaigns
Our Voices Arkansas
Patriot's Corner
Publius Forum
Randy's Roundtable
Real Debate Wisconsin
Religion and Morality
Right on Issues that Matter
Right Reason
Rocking on the Right Side
Saber Point
Saline Watchdog
Secure Arkansas
Sentry Journal
Sultan Knish
Stop Obama Satire & Cartoons
The Arkansas Patriot
The Audacity of Logic
The Blue Eye View
The Bobo Files
The Born Again Americans
TEA Party Cartoons
The Conservative Citizen
The Foxhole | Unapologetic Patriot
The Liberty Republican
The Lid
The Looking Spoon
The Maritime Sentry
The O Word
The Path to Tyranny Blog
The Real Polichick
The War on Guns
Truth About Obamacare
Twitter @ARRA
Warning Signs
Women's Prayer & Action

Editor's Managed Twitter Accounts
Twitter Dr. Bill Smith @arra
Twitter Arkansas @GOPNetwork
Twitter @BootBerryism
Twitter @SovereignAllies
Twitter @FairTaxNation

Editor's Recommended Orgs
Accuracy in Media (AIM)
American Committment
American Culture & Faith Institute
American Enterprise Institute
American Family Business Institute
Americans for Limited Government
Americans for Prosperity
Americans for Tax Reform
American Security Council Fdn
AR Faith & Ethics Council
Arkansas Policy Foundation
Ayn Rand Institute
Bill of Rights Institute
Campaign for Working Families
Center for Individual Freedom
Center for Immigration Studies
Center for Just Society
Center for Freedom & Prosperity
Citizens Against Gov't Waste
Citizens in Charge Foundstion
Coalition for the Future American Worker
Competitive Enterprise Institute
Concerned Veterans for America
Concerned Women for America
Declaration of Am. Renewal
Eagle Forum
Family Research Council
Family Security Matters
Franklin Center for Gov't & Public Integrity
Freedom Works
Gingrich Productions
Global Incident Map
Great Americans
Gold Standard 2012 Project
Gun Owners of America (GOA)
Heritage Action for America
David Horowitz Freedom Center
Institute For Justice
Institute for Truth in Accounting
Intercollegiate Studies Institute
Judicial Watch
Less Government
Media Reseach Center
National Center for Policy Analysis
National Right To Work Foundation
National Rifle Association (NRA)
National Rifle Association (NRA-ILA)
News Busters
O'Bluejacket's Patriotic Flicks
Open Secrets
Presidential Prayer Team
Religious Freedom Coalition
Renew America
Ron Paul Institute
State Policy Network
Tax Foundation
Tax Policy Center
The Club for Growth
The Federalist
The Gold Standard Now
The Heritage Foundation
The Leadership Institute
Union Facts

Blogs For Borders

Reject the United Nations

Adopt Our Troops in Prayer

Thousands of Deadly Islamic Terror Attacks Since 9/11

FairTax Nation on FaceBook
Friends of Israel - Stand with Israel
Blog Feeds
Syndicated - Get the ARRA News Service feed Syndicated!
ARRA Blog Feed

Add to Google Reader or Homepage

Add to The Free Dictionary

Powered by Blogger

  • How To Exchange Links!
  • Comments by contributing authors or other sources do not necessarily reflect the position the editor, other contributing authors, sources, readers, or commenters. No contributors, or editors are paid for articles, images, cartoons, etc. While having reported on and promoting the beliefs associated with the ARRA, this blog/site is not controlled by nor funded by the ARRA. This site/blog does not advertise for money or services nor does it solicit funding for its support.
  • Fair Use: This site/blog may contain copyrighted material the use of which has not been specifically authorized by the copyright owner. Such material is made available to advance understanding of political, human rights, economic, democracy, and social justice issues, etc. This constitutes a 'fair use' of such copyrighted material as provided for in section Title 17 U.S.C. Section 107 of the US Copyright Law. Per said section, the material on this site/blog is distributed without profit to readers to view for the expressed purpose of viewing the included information for research, educational, or satirical purposes. Any person/entity seeking to use copyrighted material shared on this site/blog for purposes that go beyond "fair use," must obtain permission from the copyright owner.
  • © 2006 - 2017 ARRA News Service
Creative Commons License
Creative Commons Attribution Noncommercial Share Alike 3.0 Unported License.