Financial Reform Law Passes – Fittingly Named The “Dodd – Frank” bill

The Financial Reform Law: “Never have the corrupt done so little for so many while shielding the guilty from “true change”.

Posted on June 29, 2010 by mcauleysworld | Edit

The Financial Reform Law: Never have the corrupt done so little for so many while shielding the guilty from “true change”.

False claims and exaggerations about the “proposed changes” to a small segment of America’s financial markets.

McAuley’s World Comments Bolded Blue

But with a few exceptions, the measure avoids dictating to Wall Street what it can and cannot do. The bill does not break up big banks or ban the trading of derivatives. Nor does it significantly streamline the confusing array of financial regulators in Washington.


A flurry of deal making allowed several industries to escape the new system. At the last minute, auto dealers were granted exemptions from new consumer rules, despite their major role in lending. Most mutual fund and insurance companies avoided a ban on some risky trading. Community banks, which make up the vast majority of their industry, got a carve-out months ago.


“This legislation is a failure on both counts,” Sen. Judd Greg  (R-N.H.) said in a statement. “It will not encourage the much-needed stability and confidence in our financial markets. It will not significantly reduce systemic risk in our financial sector.”


Sen. Blanche Lincoln (D-Ark.) agreed to scale back a controversial provision that would have forced the nation’s biggest banks to spin off their lucrative derivatives-dealing businesses. The proposal had been a particularly thorny issue for Democrats, causing internal divisions that threatened to derail the entire process.

True. The Democrats prevented the needed reform in the derivatives business, the business that brought down AIG and Lehman Brothers, derivatives based on the “toxic mortgages” produced by Fannie Mae & Freddie Mac.

Media claims that the “reform” contains the following “significant provisions”:

  • Give the government the power to wind down and seize failing firms

This “provision” extends the Government’s “right” to take over failing businesses using U.S. taxpayer money, instead of letting the companies fail as they should.

  • Create a consumer protection agency under the authority of the Federal Reserve

Oh, please. More on this “eye candy” in just a bit.  

  • Require banks to spin off their riskiest derivatives activities

Window dressing, pure window dressing. The banks can still “own” the “spin offs” and direct their activities. The banks will fund the “spin offs” and if the “spin off” fails financially and cannot repay the parent company, the Federal Government will be standing by with another “bailout” in hand.

  • Curb the ability of firms to trade their funds for their own profit

This writer believes the “curbs” will not be effective in doing what is claimed.

It (the proposed regulation) also does not re-impose laws similar to the Glass-Steagall Act that passed after the Great Depression (and partially repealed in 1999) that separated the activities of commercial and investment banking.

True: The regulation does not reinstate the Glass-Steagall Act, which for months was the cry of the Democrats – “This problem started when Glass Steagal was repealed” …. Well, now that they had the chance, why didn’t the Democrats reinstate Glass Steagal?  

Two major players were left out of the bill and the negotiations the whole time: Mortgage lending giants Fannie Mae and Freddie Mac, which have already received more than $145 billion in assistance from the taxpayers. Many Republicans — and a few Democrats — were angry that Democrats did not include Fannie and Freddie in the reforms. Many on Capitol Hill remain skeptical that will happen.

True: Oh so true! The entire financial collapse rests at the feet of Fannie Mae and Freddie Mac, yet the single piece of legislation produced so far doesn’t even mention Freddie or Fannie. Meanwhile, this same Congress has actually increased Fannie & Freddie’s power. In December, President Obama, by Executive Order, removed the $200 million dollar cap on funds available to Freddie and Fannie and provided these “Agencies” unlimited funding through the Federal Reserve.  

So, if you thought that the “Great American Financial Reform Act of 2010”, the reform that will protect us from ever having the same type of financial collapse occur again, might just take some type of action against the Agencies that caused the original collapse, well, you would be “dead wrong”. Not one word about Fannie or Freddie, in fact Fannie and Freddie are more independent, less regulated and have greater access to American taxpayer money than at any time before in the history of the Country. Congress refused to implement even the most modest of changes to Fannie & Freddie – to make Fannie & Freddie subject to the Sarbanes Oxley Act or require Freddie and Fannie to file periodic reports with the SEC.

The conference committee votes were 20-11 among House negotiators and 7-5 among Senate negotiators, strictly along party lines. The room erupted into claps and hugs when it was all done, with staffers shaking hands and saying, “big bill.”

TRUE: Mocking Joe Biden’s infamous “Big ******* Deal” comment after the passage of Obama Care against the wishes of the American People.

True. A vote right down party lines. This baby has only one parent, this bastard belongs to the Democrats, lock stock and barrel. (The final vote is pending in the Senate and the 3 RINOs in the Senate could well vote in support of their fellow Democrats)

What’s in the Wall Street reform bill – The Media’s Slant  

The final compromise that lawmakers struck will establish a consumer financial protection regulatory bureau inside the Federal Reserve, that will write new rules to protect consumers from unfair or abusive mortgages and credit cards.unfair or abusive mortgages and credit cards.

False: The claim is false because the major premise is false. A large and costly consumer agency will be created at taxpayer expense, however, “the abusive mortgages, credit cards and ATM fees which it will address, will only result in “temporary” changes to how “business is done”. In a matter of months consumers will learn that we are “back to business” as usual. Example: Credit card rates and ATM fees  are not being “rolled back” on a permanent basis. Rate increases and ATM fees will simply be delayed. This writer is willing to predict that Senator Chris Dodd will be back in January 2011, only when he returns he will be lobbying for credit card, ATM and mortgage fee increases on behalf of his “big bank buddies”.

Secondly, who will oversee the Consumer Protection Agency?  The Federal Reserve? The Federal Reserve? Wasn’t the Federal Reserve the entity responsible for overseeing the banks and financial firms that “failed” in the first place?

The final deal will also create a 10-member council of regulators, headed by the Treasury Secretary.

Regulators will be tasked with ensuring banks beef up their capital cushions,

The bill would also establish new procedures for shutting down giant financial firms that are collapsing.

WAIT ONE MINUTE: The proposed regulation does not limit the Government’s power to “take over” or “bailout” but it does delegate the authority to do so. This should remind everyone of the “TARP PROGRAM”. We the people were told we had an emergency, an emergency that required the purchase of a trillion dollars of “Troubled Assets” by the “Troubled Asset Relief Program” or “TARP”. Some 18 months later we now know that not one penny of the fund actually went to buy a single “Troubled” or “toxic asset”. Congress changed the rules after the fact. The same Congress is back and the same Congress People are at it again.

The bill aims to shine a brighter light on some of the different kinds of complex financial products, called derivatives, that are blamed for the problems that forced a bailout of American International Group (AIG, Fortune 500) and the bankruptcy of Lehman Brothers. It would force most derivatives on to clearinghouses and exchanges, to help pinpoint the value of the trades.

FALSE: At best the press claims the regulation “would force most derivatives” when it fact no one knows what percent of the “trades” will be routed into an exchange nor does the proposed “regulation” define how the “trades” will be valued.    

Lawmakers agreed to push many derivatives onto clearinghouses and exchanges that can better pinpoint the value of the securities and create firewall’s between buyers and sellers.

FALSE: The most “risky” of those “agreements” were CDS or Credit Default Swaps, which are transactions that take place directly between “involved parties, parties that don’t require a “firewall”.

They also agreed to allow leeway for financial firms to avoid exchanges and avoid posting collateral on such contracts for so-called commercial end-users,

TRUE: A “back door” to avoid any of the “proposed” regulation in this area.

Additionally, lawmakers embraced a provision that prevents big banks from making risky bets on “nontraditional” derivatives and having access to emergency taxpayer-backed loans. Banks would have to spin off their swaps desk into affiliates, if they want to make such bets.

TRUE: That the banks can and will continue to make such deals through their “affiliates”.

FALSE: That banks won’t have access to “tax payer cash”?  The Banks will be subject to “To Big to Fail” and “take-over” by the Feds as stated above. Those activites are accomplished using “taxpayer cash”.  

Volcker: Just before midnight, lawmakers agreed on a new version of the so-called Volcker Rule, which was first proposed by former Federal Reserve Chairman Paul Volcker. The measure prevents banks from owning hedge funds and trading for their own accounts.

Lawmakers agreed to gives regulators more specifics and less leeway when it comes to preventing banks from trading for themselves or owning hedge funds. But they also watered it down in several ways: It doesn’t impact insurers. And it allows some proprietary trading in areas, such as government debt, for hedging purposes and small business investments.

As for the ban on banks owning hedge funds, the provision allows Wall Street banks that take commercial deposits to sink as much as 3% of capital in hedge funds or private equity.

FALSE: The “Volker Rule” as originally proposed was gutted. The only resemblance between the originally suggested Volker Rule and that which remains is the name.

Consumer protection

Creating a consumer agency: Establishes an independent Consumer Financial Protection Bureau housed inside the Federal Reserve. Fees paid by banks fund the agency, which would set rules to curb unfair practices in consumer loans and credit cards. It would not have power over auto dealers.

False: The areas being “touted” as a “great benefit” to consumers are shams. Credit Card rates, mortgage terms and limitations on ATM fees are all “temporary” in nature. These items are the “eye candy” being offered to secure popular support for this totally inadequate legislation.   

Credit scores: All consumers have been able to get one free credit report a year from the credit rating agencies. But the bill would also allow a consumer to get an actual credit score along with a report.

WHO CARES: A free credit report and a free credit score. Everyone in the Country has access to free credit reports and a free credit score …. Just check your email.

Interchange fees: Lawmakers want the Fed to crack down on debit card swipe fees, which retailers pay to banks to cover the operational cost of transferring money. The Fed could cap the fees and make them more reasonable and proportional.

False: Cap or temporarily limit? To establish a temporary limit. Again, this writer bets the requests for an increase in fees has already been prepared and Congress has already told their friends in the banking industry when to submit the requests. I’m sure the requests won’t be submitted until after the first week in November 2010.

Banning ‘liar loans’: Lenders would have to document a borrower’s income before originating a mortgage and verify a borrower’s ability to repay the loan.

FALSE – ABSOLUTELY FALSE: This lie, more than any of the other lies, upsets me the most. Liar loans have not been banned. The only limitation on Liar Loans is this; Liar Loans cannot be “bundled” and sold as securities. The banks are free to make and keep as many Liar Loans as they like. As the banks will be subject to “take over” and “bailout” if they are “to big to fail” there will be no “market pressure” to limit these loans. The Congress could eliminate “Liar Loans” tomorrow by instructing the Federal Reserve, yes the Federal Reserve charged with overseeing this “monster”, to rescind the “mortgage underwriting guidelines” that created “Liar Loans” in the first place, but Congress failed to do so. If Congress wished to end “Liar Loans” why didn’t they do so?


The Financial Meltdown – who, when, where and why:

Professor Stan Liebowitz: The Real Scandal –

Professor Thomas J DiLorenzo: The CRA Scam and its Defenders:

John R Lott, Jr : Analysis – Reckless Mortgages Brought Financial Market To Its Knees,2933,424945,00.htm


Mortgage help for unemployed: Unemployed homeowners with good credit would be eligible for low-interest loans to help them avoid foreclosures. The bill would spend $1 billion on such relief, using funds that had been directed for Troubled Asset Relief Fund bailing out the financial system.

FASLE: This is not a new program but an adaptation of Obama’s failed “mortgage rescue programs” that are already in place.

Fixed-equity annuities: Prohibits tougher federal rules on life insurance products, in which customers pay a lump sum upfront in exchange for monthly income over time, pegged to an index. The Securities and Exchange Commission had been gearing up to step in and start requiring more disclosure for these products, often sold to seniors, that are currently regulated by state insurance commissioners. Lawmakers decided to stop the SEC from tougher federal regulation.

TRUE: The Democrats moved to stop SEC regulation – the Democrats moved to de-regulate.  

Too big to fail

New oversight power: Creates a new 10-member oversight council consisting of financial regulators to look out for major problems at financial firms and throughout the financial system. The Treasury Secretary gains a key role in enforcing tougher regulations on larger firms and watching for systemic risk. The council also has veto power over new rules proposed by new consumer regulator.

Unwinding powers: Gives the FDIC new powers to take down giant financial firms in the same way it takes down banks. Banks would be taxed to reimburse the federal government for the cost of resolving these firms after a failure occurs.

True: To Big to Fail, Government takeovers and taxpayer bailouts will continue. This proposed regulation “institutionalizes” the Government’s ability to “take over” or “seize” private companies and use “taxpayer money” to resolve the company’s financial difficulties. Congress, unlike the citizens they represent, believe “TRAP’ was a success and that “We the People” would like to see “TARP” perpetuated.    


The fatal flaw involves the fact that he same Congress who proposed this law will be the one to enforce it. The Congress and the Executive Branch have proven themselves unwilling to enforce the laws of this land.

Fannie & Freddie, the firms who were primarily responsible for the “Financial Meltdown” are not even mentioned in this legislation. The “root cause” of the “meltdown”.

Remember the regulators warned Congress about the impending Fannie & Freddie Meltdown. Congress not only ignored the warnings, but accused the Regulators of “racism”. A “new tune, with the same old lyrics”.

One of the last motions Friday was to name the bill after the two chairmen, Sen. Chris Dodd(D –Conn)  and Rep. Barney Frank (D-Mass.), who had shepherded the legislation through the House and Senate over the past year. At 5:07 a.m., they agreed unanimously that it would be known as the Dodd-Frank bill, and the sound of applause echoed down the empty hallways.

TRUE: How fitting – naming this sham reform proposed by the Democrats after two of the Democrats most responsible for the original meltdown …

Contact your Congress Person and tell them to VOTE NO!

Lastly, the legislation does not impact CDS (Credit Default Swaps) issued to foreign nations or those who hold their debt. This legislation will do nothing to monitor or prevent AIG (a government owned entity) from trading in or issuing CDS on say, the National Debt of Greece.


UPDATE: SEC Says New Financial Regulation Law Exempts it From Public Disclosure


The Oil Has Stopped Flowing !

BP: No oil leaking into Gulf from busted well

NEW ORLEANS – BP says oil from its broken well has stopped gushing into the Gulf of Mexico for the first time since April.

The announcement Thursday came after company officials said all valves had been shut on a new cap over the busted well in an experiment to stop the spill.

Kent Wells, a BP PLC vice president, said at a news briefing that oil stopped flowing into the water at 2:25 p.m. CDT.

McAuleys World Comments:

Thank God!

What a shame that it took 87 days to complete a 7 day repair …. 180,000,000 (180 million) extra gallons of oil spilled into the Gulf.

Anti-Abortion Groups Slam Administration Over Federal Funding For Abortions In Pennsylvania Health Plan

Anti-abortion groups are claiming that millions of federal dollars are about to go into a Pennsylvania health care plan that would cover abortion, contrary to lawmakers’ pledge to erect a virtual wall between such coverage and taxpayer funds. 

The Pennsylvania Insurance Department announced at the end of June that the federal government had approved $160 million to set up a high-risk insurance plan for thousands of Pennsylvania residents with pre-existing conditions. Though the announcement made no reference to abortion and the policy itself says “elective abortions” are not covered, the National Right to Life Committee claimed it would cover abortions in almost every circumstance. 

“What their plan actually does is say if it’s legal, it’s covered,” said NRLC Legislative Director Douglas Johnson. “Abortion ends up being covered if it’s not explicitly excluded.”

McAuley’s World Comments:

For a history of Roe vs. Wade and a detailed explanation of why elective abortions will be funded in Pennsylvania and the rest of the United States see:   Update: Roe vs. Wade – How Obama Care Will Effect Taxpayer Funding Of Abortions

Excerpts from that post:

Having decided in 1973 to establish a constitutional right to abortion to serve women’s “health,” the courts decided that legislative references to health services or “medically necessary” services (the term of art used in the Medicaid statute) encompass abortion.

In the abortion context, the Supreme Court has said that “health” must be defined very broadly to include “all factors – physical, emotional, psychological, familial, and the woman’s age – relevant to the wellbeing of the patient.” Doe v. Bolton, 410 U.S. 179, 192 (1973). In short, if a physician decides that a woman should be able to have an abortion for her “well being,” a government program requiring provision of health services must provide payment for such abortions.

 In the years before the Hyde amendment was first enacted by Congress in 1976, Medicaid was required to pay for about 300,000 abortions a year. No regulatory or administrative leeway was allowed on this point. The Medicaid statute said that grantees must provide “medically necessary” services provided by physicians, and the federal courts held that this category included elective abortions, even though the statute never says the word “abortion.” As one court has observed: “Because abortion fits within many of the mandatory care categories, including‘family planning,’ ‘outpatient services,’ ‘inpatient services,’ and ‘physicians’ services,’Medicaid covered medically necessary abortions between 1973 and 1976.” PlannedParenthood Affiliates of Michigan v. Engler, 73 F.3d 634, 636 (6th Cir. 1996).

Even after the Hyde amendment to the Labor/HHS appropriations act was enacted in 1976, barring funds appropriated in this act from being used for most abortions, a legal battle ensued for years. Not until 1980 did the U.S. Supreme Court rule that the statutory language of the Hyde amendment trumps the underlying statute’s presumptive mandate for abortion, and is constitutionally valid. Harris v. McRae, 448 U.S. 297 (1980).

The Senate bill’s new funds are not appropriated in the Labor/HHS appropriations act, so Hyde does not apply to them.

 A similar situation came to light in 1979, when members of Congress asked why the Indian Health Service (IHS) was continuing to provide abortions despite enactment of the Hyde amendment. The agency replied that it had no choice but to do so: The authorizing legislation for the IHS created a broad mandate for services to conserve the “health” of Indians, and the Interior appropriations bill funding these services contained no abortion limitation like the Hyde amendment to the Labor/HHS bill. Therefore “we would have no basis for refusing to pay for abortions” (Letter from Director of the Indian Health Service to Cong. Henry Hyde, July 30, 1979).

Not until 1988 did Congress finally revise the authorizing legislation for the IHS to require that program to conform to the annual Hyde amendment.

The problem here is exactly parallel. The new billions of dollars appropriated here for services at CHCs simply are not covered by the Hyde amendment

Day 87 In The Gulf:Leak Foils BP Effort to Choke Gusher With Cap

Photo Posted 07/15/2010

NEW ORLEANS — BP engineers working to choke the flow of oil into the Gulf of Mexico found a leak on a line attached to the side of the new well cap and were trying to fix it Thursday before attempting to stop the flow of crude.

BP said Wednesday evening it had isolated the leak and was repairing it before moving forward. It wasn’t clear how it would affect the timing of the operation, or whether oil continued to be slowly closed off into the cap.

Work started earlier Wednesday after a day-long hiatus to allay government fears that the disaster could be made worse by going forward with the tests to determine whether the temporary cap can withstand the pressure and contain the oil. It was the best hope yet of stopping the crude from streaming into the water for the first time since the April 20 explosion on the Deepwater Horizon rig that killed 11 people.

The process began with BP shutting off pipes that were funneling some of the oil to ships on the surface so the full force of the gusher went up into the cap. Then deep-sea robots began slowly closing, one at a time, three openings in the cap that let oil pass through. Ultimately, the flow of crude will be blocked entirely.

Photo Posted 07/11/2010 - Where Is The Leak?

All along, engineers were watching pressure readings to learn whether the well is intact. The first two valves shut off like a light switch, while the third works more like a dimmer and takes longer to close off. The leak was found in the line attached to the dimmer switch, but live video footage showed that oil previously spewing from other sources on the cap remained closed off.

Work started earlier Wednesday after a day-long hiatus to allay government fears that the disaster could be made worse by going forward with the tests to determine whether the temporary cap can withstand the pressure and contain the oil. It was the best hope yet of stopping the crude from streaming into the water for the first time since the April 20 explosion on the Deepwater Horizon rig.

The process began with BP shutting off pipes that were funneling some of the oil to ships on the surface so the full force of the gusher went up into the cap. Then deep-sea robots began slowly closing, one at a time, three openings in the cap that let oil pass through. Ultimately, the flow of crude will be blocked entirely.

Retired Coast Guard Adm. Thad Allen, the Obama administration’s point man on the disaster, said a committee of scientists and

07/14/2010 Close up of area just above current leak - where is the oil?

engineers will monitor the results and assess every six hours, and end the test after 48 hours to evaluate the findings.

“I was gung-ho for this test and I remain gung-ho for this test,” he said Wednesday.

If the cap works, it will enable BP to stop the oil from gushing into the sea, either by holding all the oil inside the well machinery like a stopper or, if the pressure is too great, channeling some through lines to as many as four collection ships.

The cap — a 75-ton metal stack of lines and valves — was lowered onto the well on Monday in hopes of either bottling up the oil inside the well machinery, or capturing it and funneling it to the surface. But before BP could test the equipment, the government intervened because of concerns about whether the buildup of pressure from the gushing oil could rupture the walls of the well and make the leak worse.

Read the story of why the Obama Administration allowed oil to flow unchecked into the Gulf for two days here: DAY 86 In The Gulf: All Work Stopped On New Cap And Relief Wells – Oil Flows Unchecked Into Gulf

Update: 07/15/2010 –  The Oil Has Stopped!

BP: No oil leaking into Gulf from busted well

NEW ORLEANS – BP says oil from its broken well has stopped gushing into the Gulf of Mexico for the first time since April.

The announcement Thursday came after company officials said all valves had been shut on a new cap over the busted well in an experiment to stop the spill.

Kent Wells, a BP PLC vice president, said at a news briefing that oil stopped flowing into the water at 2:25 p.m. CDT.

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