[Vision2020] Whores and Their Elected Pimps

[Art Deco]

  [image: The New York Times] <http://www.nytimes.com/>


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April 1, 2012
Their Contributors’ Bidding

Don’t they ever learn? Large bipartisan majorities in the House and Senate
have now passed the deeply flawed JOBS
Act<http://www.nytimes.com/2012/03/28/us/politics/final-approval-by-house-sends-jobs-bill-to-president-for-signature.html?scp=6&sq=%22Jobs%22%20%22obama%22%20&st=cse>and
President Obama is expected to sign it soon. The full name is equally
seductive: Jump-start Our Business Start-ups Act. What it is is an
invitation to a fresh round of financial malfeasance. It rolls back
important investor safeguards from the post-Enron Sarbanes-Oxley law and
the post-financial crisis Dodd-Frank law.

The official justification for the legislation — debunked in
expert<http://banking.senate.gov/public/index.cfm?FuseAction=Files.View&FileStore_id=a5ded25c-135d-484a-943a-bfa52fba3206>
testimony<http://banking.senate.gov/public/index.cfm?FuseAction=Files.View&FileStore_id=5aaabb66-36eb-4b1e-8195-3cbeda832814>—
is that rules on disclosure, accounting and auditing make it unduly
difficult for new companies to raise money by issuing stock. The real
driving force behind the bill is the eagerness of politicians in both
parties to please bankers and business executives who relentlessly demand
deregulation and have the deep pockets to get their way, especially in an
election year.

The drive to deregulate doesn’t stop there. Bipartisan majorities in the
House passed two <http://www.govtrack.us/congress/bills/112/hr2779>
more<http://www.govtrack.us/congress/bills/112/hr2682>damaging bills
last week that would undercut provisions in Dodd-Frank to
rein in derivatives, the complex financial instruments at the heart of the
financial crisis. The bills’ supporters say the measures are mere technical
corrections. In fact, they are aimed at limiting regulators’ ability to
police derivatives.

The more egregious of the two would exempt a swath of derivatives
transactions from almost all Dodd-Frank regulation — including reforms to
enhance transparency and deter fraud. At issue are deals that occur between
bank affiliates, as opposed to between banks and their clients. Such
transactions can be routine and harmless, or complex and risky. Current law
gives regulators the authority to decide which ones require scrutiny, but
the House bill would broadly exempt the deals from regulation — in effect,
replacing regulators’ authority with a statutory ban on regulatory
oversight.

Two more measures to shield banks from derivatives regulation could come to
the House floor in the next months.
One<http://www.govtrack.us/congress/bills/112/hr2586>would water down
pending rules to require that most derivatives be traded
on open exchanges, rather than as private contracts between banks and
clients. Exchange trading is a vital step toward a stable and transparent
market, but banks oppose it because it would reduce the fees they earn from
dealing in the dark.
Another<http://www.govtrack.us/congress/bills/112/hr3283>bill would
let the banks avoid Dodd-Frank regulation by conducting
derivatives deals through foreign subsidiaries, a loophole that would
virtually invite banks to engage in unregulated transactions on a
potentially vast scale.

Unless President Obama changes his mind, the JOBS Act is a done deal. And
sooner or later, investors will be harmed by its heedless weakening of
important protections. Congressional Democrats and Mr. Obama can still stop
the attempted rollback of derivatives’ regulation. They need to refresh
their memories about how the country got into the financial mess — before
it happens again.


-- 
Art Deco (Wayne A. Fox)
art.deco.studios at gmail.com
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