As “in your face” as the fiscal cliff is these days, it’s not the only growing concern facing Americans as we see dirty politics begin to make their rounds among Democrats and Republicans. In fact, some Democrats are pushing quite the passive aggressive approach for dealing with the fiscal cliff: let the government go over so that the Dems would have the upper hand, more leverage, for more long term changes into the new year. In other words, turn the heat up so that decisions will be made out of desperation instead of what might be better for the taxpayers.
No doubt, the negotiations and cut throat atmosphere isn’t quite as rosy as was promised in the hours after the election results. Remember, the last time the two parties danced this bizarre dance, we, as in the American taxpayers, were furious at the level of immaturity and senseless bickering.
If that were the only problem, it might could be a bit more intolerable; unfortunately, it’s far from it.
Dodd Frank Obstacles
Despite the safety found in Obama’s re-election for the Dodd Frank reform bill, there are obstacles that must be overcome if the law is to continue to serve it’s purpose – and it’s likely going to be met with a lot of resistance from the Republican side. Remember, the likes of JPMorgan Chase CEO Jamie Dimon strongly supported a Romney/Ryan White House. Bankers and other Wall Street heavy hitters went to bat for Romney, who promised to repeal the law in its entirety. That, of course, would have meant the end of those sweeping regulations that keep those big banks in line. It also could have jeopardized the future of the Consumer Financial Protection Bureau, which has single handedly revamped the consumer financial sector nearly in its entirety.
That resistance, though, is beginning to worry supporters that funding might be held hostage. These new laws, including the 2009 CARD Act had put into place true protections for consumers, was the first indication in many years that the government indeed was serving its purpose: protecting the American consumer/taxpayer. While that sounds dramatic, there’s no denying the facts. Until there’s more permanency built into the foundation, these laws will remain shaky. The Volcker Rule is especially troublesome since it puts into place especially frustrating guidelines for investors, traders and those who oversee private equity funds.
The goal was to have this aspect of the law finalized by last summer; however, as we all know, little gets done when it seems as though the country is being run by a “group of petty 6 year olds who are more interested in making sure little brother doesn’t get an ounce more ice cream in his bowl”, as one analyst said. Before long, the politicians had argued themselves into a bit of an extended time period, courtesy of the elections. Now, though, it’s going to be important for the Obama Administration to ensure the final scopes are put into place that will significantly inhibit efforts to create more “too big to fail” scenarios.
Regulations
Then, of course, there are all of those pesky regulations associated with derivatives trading. This is being addressed by the Commodities Futures Trading Commission, which was also put into place by Dodd Frank regulations. Currently, there are position limits to consider, too. You may recall a federal judge ruled them out last year, citing unclear specification in the language. That sent the bill’s authors back to square one to revamp the guidelines. Meanwhile, those big banks move forward in their efforts of reining in big paydays. And if you’re wondering how it affects you, take a look at the price of a loaf of bread. These regulations affect nearly every aspect of the American economy, either directly or indirectly.
Actions
So what are the specific actions needed? Here’s what we found:
Most importantly, U.S. tax code reform must be made a priority and ideally, Congress will address that simultaneously as it searches for solutions for the fiscal cliff.
There’s been a growing concern over the use of “super computers and advanced algorithms”. They, say many, are used to manipulate the markets. These might include money market mutual funds which, you may recall is what was behind the federal bailout in 2008.
and,
So-called “high frequency trading” which puts those in the private sector at a disadvantage with the government sectors.
As long as President Obama is in the White House, these laws are safer, even if they’re not cemented. There’s no way to ensure retirement plans and brokerage investors are protected any other way. And, too, the one thing both sides of the aisle can agree on is the need for aggressive participation and leadership. They just happen to disagree on where that leadership should come from. Bottom line – with more than $600 billion in tax hikes and spending cuts barrelling towards us, there is simply no time to waste. To do so is unethical, unnecessary and should be tolerated on any level.
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