Thursday, March 15, 2012

Complexity 2

Via Of Two Minds
Consider the Glass-Steagall Act, at 37 pages in length, and the 2,319-page monstrosity of the “Dodd-Frank Wall Street Reform and Consumer Protection Act:" (Source)

Back in December, Nick Schulz helped put the size of the 2,074-page healthcare bill into some historical context by comparing its length to some previous bills that rank among the most consequential in U.S. history, like the 82-page Social Security Act of 1935 and the 74-page Civil Rights Act of 1964.

Now that Congress has passed the “Dodd-Frank Wall Street Reform and Consumer Protection Act,” it might be a good time to compare the 2,319-page financial reform bill (245 pages longer than the healthcare bill) to the previous bills listed below (and see graph) that are considered among the most consequential legislative acts for banking and finance.

1. Federal Reserve Act (1913) – 31 pages.

2. Glass-Steagall Act (1933) – 37 pages.

Actually, the entire fraudulent tapeworm could be killed with a single page of legislation, or more correctly, a single five-point paragraph: To wit:

1. Commercial banks cannot conduct any investment banking, and investment banks cannot conduct any commercial banking. Any financial institution that accepts deposits or issues loans or financial instruments of any nature will be regulated as a bank.

2. All assets of any nature must be listed at the close of business daily marked to market, as in the futures and options markets. If there is no regulated market for a class of financial instruments, the Treasury is instructed to establish and regulate a market for that class of financial instruments. Holding assets off-balance sheet is a criminal offense with a minimim fine of $10 billion per asset. If the fine cannot be paid in full, the FDIC is instructed to seize the bank and liquidate its assets in an orderly and timely manner.

3. No bank will be permitted to have assets or liabilities in excess of the smallest gross domestic product (GDP) of the 50 states.

4. No private banks may create any money through debt. All loans must be made out of existing deposits and equity. (via David V.)

5. No exceptions or exemptions are allowed to these statutes.

That would pretty much do it. Separate commercial from investment banking, require all assets to be marked to market every day, and limit banks from expanding to the point of being able to blackmail the nation, i.e. "too big to fail."

Instead, by one count, Dodd-Frank requires regulators to create 243 rules, conduct 67 studies, and issue 22 periodic reports. Does anyone seriously believe this complexity will "fix" anything?
Note: As I recall, Bernie Sanders had a 1-page health care reform act: Medicare for all. Obviously that didn't get anywhere. Paging Doctor Tainter...

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