Obama Proposes Major Regulatory Reform for the Financial System
Jun 19, 2009
Posted by Jody Eisenman | Filed under Uncategorized
In a move not seen since the depression of the 1930s, President Obama is seeking legislation to try and avoid a future financial crisis. The major points include giving the Fed more oversight, regulating financial derivatives for the first time, and creating a mechanism for the orderly liquidation of any financial firm whose failure could threaten the stability of the entire system. Ile I think pretty much everyone believes that changes need to be made, many question the wisdom of giving more power to an institution (the Federal Reserve) didn’t do a very good job during the present crisis. In addition, Edward Yingling,president of the American Bankers Association, said his group has some “real concerns” about the consumer protection measures. “For community banks that had nothing to do with this crisis, this will be massive regulation that will burden them with new costs,” Yingling said as he arrived at the White House for the announcement. Some version of this bill will probably be written into the law, but expect lots of political maneuvering over the next several months. Meanwhile, the state of California is moving closer to potential Armageddon. Like most states, California overspent in the boom times without giving much thought to the future. One of the biggest problems with municipal budgets is that legislators seek to get re-elected today, so they spend without regard to where the money will come from down the road. As Gov. Rockefeller of NY used to say, “Spend, spend, spend; Elect, elect, elect”.In the case of California, the recession, combined with the massive subprime lending crisis has caused a severe shortfall in revenues. The state may face bankruptcy by the end of July. Other states, as well as municipal bond holders are watching anxiously to see how this plays out. The stock market continues to trade in a relatively narrow range. However, the last few days have been negative, so bulls probably have to assert control soon or risk the market going through support levels. Although I believe that this is just a temporary pullback, you never know.
June 19th, 2009 at 5:49 am
Fact:
Word from the UC system (myself an employee), all staff and faculty will be forced into a mandatory 8% salary cut. They’re voting on whether it be by pay or furlough or both. (1)
Couple this with an anticipated 9% increase in health care costs (2) next year, a 0.25% increase in California state taxes (3), and you may see another wave of foreclosures beginning some time next year.
As it is, the UC faculty and staff wages are already below industry**.
Opinion:
We’re in a precarious situation, but if the state files bankruptcy, all the better; then everyone’s out of the job, and we’re in the same boat together. At least then there might be a moratorium on foreclosures in the state of California, or a situation similar to the unofficial non-foreclosure policies of the great depression.
(1) http://chronicle.com/news/article/6668/u-of-california-faculty-and-staff-members-could-face-8-pay-cut
(2) http://seattletimes.nwsource.com/html/businesstechnology/2009353785_apus2010healthcosts.html
(3) http://www.calstrs.com/Newsroom/What%27s%20New/tax_increase.aspx
** No linkable proof, but it’s the nature of academia.