Amid much hoopla, the Obama-backed financial regulation bill (“Finreg”) finally passed Congress and was signed into law by a gloating president. Supposedly, it was crafted to make future mortgage meltdowns impossible by throwing a leash on the greedy, scheming Wall Street tycoons who caused the mess.
The mortgage mess was in part caused by the greed of Wall Street — and for that matter, by the greed of Main Street, i.e., by consumers who used NINJA loans (no income, no job or assets) to get into homes they couldn’t afford, hoping to get rich quick. But this sort of greed is always with us. What specifically caused the disaster, what brought it on, was the massive moral hazard created by Fannie Mae and Freddie Mac, which bought all that toilet paper — not to mention the supply of cheapo money provided by the ever-generous Fed. But Fannie and Freddie aren’t even mentioned in Finreg!
Instead we find, stuffed in next to a couple thousands of pages of onerous regulations, all kinds of garbage completely irrelevant to the mortgage mess, such as mandates for metastasizing racial and gender quotas and preferences.
Most interesting among the irrelevant garbage in the bill is a tidbit uncovered by Fox Business News (July 28). Besides doubling the funding of the SEC, the Democrats in Congress put in a provision that essentially exempts the SEC from public disclosure in the form of the Freedom of Information Act (FOIA). Yes, a sneaky provision of the new law will allow the SEC to turn down virtually all requests for release of information to the public or the news media. (Fox discovered the surprising clause when the SEC denied an FOIA request by one of its reporters immediately after the law was enacted.)
Why would the SEC want to end even this small amount of transparency? Could it be because the SEC clowns were watching porn on their government work stations while the mortgage fraud was growing and Bernie Madoff was continuing his Ponzi scheme?
Behold the face of “reform”: regulations on everyone but the government agencies that caused the excess, and even more money for and less accountability from the agency that failed so miserably to do its job of stopping it.