The Supreme Court Is Poised to Strike Down The Consumer Financial Protection Bureau

Very good news! Yes, it is high time slay this monstrosity (i.e. CFBP) of the Obama administration!

Next should be the repeal of the terrible Dodd–Frank Wall Street Reform and Consumer Protection Act!


The Supreme Court Is Poised to Strike Down a Major Obama-Era Agency | Cato Institute: The Consumer Financial Protection Bureau concentrates power in the hands of a single, unelected, unaccountable official.

The Crazy Idea Of Living Wills For Large U.S. Banks

Posted: 8/10/2014

Trigger

This week the wall street journal reported twice about the so called living wills large U.S. based banks are mandated to write and submit to Big Government.

Here are the two articles:

“U.S. Tells Big Banks to Rewrite 'Living Will' Bankruptcy Plans/Fed, FDIC Say Plans Provide 'No Credible Path' Through Bankruptcy; Raise Specter of Tougher Rules, Even Break-up”

‘’Banks' Failure on 'Living Wills' Frays Relations With Regulators”

For sake of time and brevity I will not get lost in details here!

Dodd-Frank’s Unconstitutional Insanities

The Dodd-Frank monster act is a living proof how inept and statist our politicians are! The Founders are in shock again!

Just to have this absurd idea to mandate large companies to annually submit a report how they will go out of business is beyond belief. It is a waste of money and effort!

This is another attempt by the U.S. Big Government to control and micromanage U.S. based businesses.

Do you wonder why U.S. companies seek headquarters outside the U.S.? Or why an increasing number of U.S. expats give up their U.S. citizenship? These are warning signs of the times like the canary in the coal mine!

Over The Decades FDIC Was Turned Into Powerful Agency

It appears over the decades since 1933, the FDIC was given more and more power to control and supervise banks in the U.S.

One should point out, it was already a huge Big Government mistake to implement a government run deposit insurance in 1933! An Unconstitutional act! And back then, Big Government implemented in the same act other socialist measures like the prohibition banks from paying interest on checking accounts etc.

No Wonder The Great Recession Continues!

Like President Franklin D. Roosevelt and his contemporary politicians messed up and prolonged needlessly the Great Depression, our current president and politicians did not learn the lesson!

Central Banks As A Systemically Important Financial Institution

Example Federal Reserve Board

If we agree that e.g. the Federal Reserve Board is such an institution, then who supervises the Fed, which has helped to trigger the real estate implosion, the financial crisis of 2008, and the sovereign debt crisis of Western countries.

A Culprit Of The Great Recession

Anybody who claims that the Fed or its then Chairman Bernanke prevented worse do not know what they are talking about.

Cheap money has been and still is a reckless policy conducted by the Fed. The Fed completely failed to prevent the drastic deterioration of lending standards before the real estate bubble burst. I have written a number of blog posts about this subject (see e.g. here, here).

A Systemically Important Financial Institution

This is the latest regulatory boondoggle our mostly inept political leaders came up with. It is a typical overreaction we have seen so often. It is telling that our political leaders apply SIFI only to financial institutions other than central banks.

To divide financial institutions in this way will not prevent the next financial crisis. On the contrary, such arbitrary distinctions will be circumvented. New financial institutions or instruments will be created as necessary.

Large Financial Institutions Are Treated As Utilities

Anyone who still continues to allege that the financial sector was not regulated or was wrongly deregulated is a fool.

Thanks to acts like Dodd-Frank Wall Street Reform and Consumer Protection Act  our political leaders have essentially nationalized large banks. This particular act has also severely and unnecessarily impacted much smaller financial institutions other than the big banks e.g. debt collectors.

The Many Horrors of Dodd-Frank Act

An Act Containing Too Many Horrors

This monstrosity of an Act of the U.S. Congress is so full of horrors that a cabinet would not suffice to describe them.

So I just pick one here from source. This well written article titled “Dodd–Frank Mortgage Rules Unleash Predatory Regulators” (Emphasis added) published by the Heritage Foundation is very recommendable!

It is a great myth that a deregulated financial sector is the cause of the Great Recession or financial crisis of 2008.

“Ability-to-Repay Rule

The cornerstone of the mortgage regulations finalized on January 30 by the CFPB is a lender obligation to “make a reasonable and good faith determination based on verified and documented information that the consumer has a reasonable ability to repay the loan according to its terms.”[20] This ability-to-repay provision is more than a procedural requirement. It is the basis of an expansive new consumer right to sue lenders for miscalculating their financial fitness for a loan.

Under the new regime, a borrower may sue a lender within three years of an alleged violation, such as improperly documenting income or assets, or incorrectly calculating the borrower’s financial obligations. Those who prevail may recover damages equal to the sum of all finance charges and fees paid—potentially tens of thousands of dollars.

A borrower may also assert a violation of the ability-to-repay requirement as a defense against foreclosure—even if the original lender sold the mortgage or assigned it to a servicing firm. (The lawsuit may ensnare an assignee or holder of the mortgage, as well.) If successful, the borrower may recover all mortgage finance charges and fees paid[21] in addition to actual damages; damages in an individual action or class action; and court costs and attorney fees.” (Emphasis added)

Intentional Consequences

Low and modest income People will be denied mortgage loans, because no lender will risk to be sued. Of course, in this scenario federal government will sue lenders on the basis of cooked up charges of discrimination. A beautiful catch 22 situation created by big government.

The costs of mortgage lending will go up paid for by borrowers.

Banks are becoming like utility companies run by big government in Washington

Dodd And Frank

I have said it before, that this law is named after these two jokers is almost poetic justice. Senator Chris Dodd was a special friend of the CEO of Countrywide Financial, Angelo Mozilo. Thus, Senator Dodd preferred not to run again for the U.S. Senate to avoid scrutiny.

Representative Barney Frank was not much better. E.g. his absolute refusal to reign in the Fannie Mae and Freddie Mac when there was still time to prevent the meltdown in the residential real estate market speaks for itself.