When they're down, kick them

I have absolutely no idea what's in the proposed legislation to regulate the banking and credit industry. Don't know and frankly, am afraid to look.

Despite the Comrade and his Merry Marxists' remarks about George Bush single-handedly destroying the US economy, what really caused the collapse was feel-good legislation.

You may not recall that the so-called "Dot-Com Bubble" burst towards the beginning of year 2001. The economy was already slipping into a recession, which was overshadowed by the islamic terrorist attack on the World Trade Center later that year. The events of 9/11 only further wrecked the economy -- by bringing it to a screeching halt for a couple days and then throwing the nation into a state of uncertainty.

So how to boost the economy? Hmmm, let's see. There was something called the CRA, the Credit something Act (could it be "redistribution"?), passed in the 1990s, I believe. What this did was give whoever was in charge the authority to bully the banks into giving mortgages to the unemployed, the poor, apparently any ol' vagrant who needed a place to stay. So the Fed and others meddling in financial affairs began to lean heavily on the banks to extend these ill-advised mortgage loans.

Well, there was a lot of building going on, for a while. The money trickled around, for a while. Then the bill came due, and in October, 2008, the whole house of cards came crashing down. The insurance industry was deeply impacted because, after all, the insurance industry covers construction, but also because all those bad mortgages ended up in Fannie Mae and Freddie Mac funds, backed by the "full faith and credit of the USA." Insurance companies had invested in the crappy mortgage loans.

So now we're supposed to believe that congress suddenly has gained an in-depth and useful understanding of the financial industry? God knows, they've done wonders with TARP and the Stimulus Bill, haven't they? I mean, things are booming, aren't they? Apparently they are inside the Beltway, because the government and government employment is expanding by leaps and bounds. But the private economy is still on its back.

Honestly, I shudder to think what congress might do to the financial industry. It's not like Chris Dodd, Barney Frank, Nancy Pelosi, and anyone else in the House leadership has any faint idea of how financing actually works. I suspect they're just trying to establish regulations that will force banks to pass out hundred-dollar bills to anyone who steps up to the window. Isn't that how the CRA mortgage thing worked (or didn't work.)

But the Comrade says he didn't run for office to help "Fat Cat Bankers." Well, Comrade, they're citizens, too. Unfortunately you represent all of us. The presidency and vice presidency are the only offices in the US that represent all the people. And apparently, the Comrade believes he can just raid the piggy banks of all the financial institutions in the nation, and all will be well. I doubt it.

For one thing, a lot of those financial institutions are still dealing with all those "toxic assets" created by the Fed's loaning guidelines and the CRA legislation. No one has completely recovered from that yet. For another thing -- and this is a big one -- the state and federal governments are now competing in a big way for credit. When there are large government deficits, government borrowing tends to crowd out the private sector. I wonder how many banks are buying T-Bills (US Treasury notes) rather than lending to Joe SixPack to expand his HVAC business.

And, for that matter, how many voters elected the Comrade to pour the nation's treasure into groups like ACORN or to fork it all over to SEIU? Or to give Al Gore-Nancy Pelosi-funded green companies huge doses of investment and all kinds of legislative and unlegislated regulatory "encouragement" at taxpayer expense.

The ten most chilling words in the English language are: "I'm from the government and I'm here to help you."

What additonal horrors can we expect as Washington "fixes" the financial industry?