Financial Reform Bill

[renowiggum]

I haven't read anything good about it yet, there's an interesting story being reported in the WSJ, which I read about here (http://gregmankiw.blogspot.com/2010/07/dodd-frank-anti-stimulus-bill.html). In part:

Standard & Poor's, Moody's Investors Service and Fitch Ratings are all refusing to allow their ratings to be used in documentation for new bond sales, each said in statements in recent days. Each says it fears being exposed to new legal liability created by the landmark Dodd-Frank financial reform law.

...

There have been no new asset-backed bonds put on sale this week, in stark contrast to last week, when $3 billion of issues were sold. Market participants say the new law is partly behind the slowdown.

It's amazing what happens when the government decides to punish people for doing business. Sometimes, they say just "no, thank you."

[wolf_chatter]

I haven't read anything good about it yet, there's an interesting story being reported in the WSJ, which I read about here (http://gregmankiw.blogspot.com/2010/07/dodd-frank-anti-stimulus-bill.html). In part:

Standard & Poor's, Moody's Investors Service and Fitch Ratings are all refusing to allow their ratings to be used in documentation for new bond sales, each said in statements in recent days. Each says it fears being exposed to new legal liability created by the landmark Dodd-Frank financial reform law.

...

There have been no new asset-backed bonds put on sale this week, in stark contrast to last week, when $3 billion of issues were sold. Market participants say the new law is partly behind the slowdown.

It's amazing what happens when the government decides to punish people for doing business. Sometimes, they say just "no, thank you."

chilling effect but not enough and you get what happened over the past 20 years. I don't know enough about the bill to comment but so far it seems to be doing some chilling?

[renowiggum]

I agree that the ratings agencies, along with existing government regulations that required ratings from particular agencies, contributed to the blow-up we saw.

But Congress likes to pass 2,300 page bills faster than anyone can read them and digest their effects, all in the name of "doing something," and I doubt that what they wanted was a "we're taking our ball and going home" withdrawl of all bonds from public sale.

What Congress really wants is a way to be able to blame a figurehead for a crisis in which there's a lot of blame to go around. But trying to put all of the blame on a scapegoat gives that scapegoat the strong incentive not to participate at all. Perhaps a better approach would be to institute some more rigorous definitions of what A, AA, AAA, etc really mean.

As well to hold Mr. Mad Money himself responsible for the investment advise he gives, or Charlie Schwab, or any of the other players in the financial arena. By trying to single out these bond ratings and making them (more) official, Congress puts an inachievable goal on the table as the legal standard: perfect predictions of future performance.

That's really a pretty terrible solution.

[BustNChops]

I believe something was/is needed. But I've heard too much criticism of the bill and the potential for job impact is real. We can't have that. Also, it did nothing - nothing to address Fannie/Freddie.

I think Jack Welch is right. He said, "Today President signs empty bill that starts lobbying frenzy. Regulators behind scene will (over) next two years write real bill."

Dog and pony show.

[battle.borne]

Anything that promotes stability and financial transparency is a good thing. Unfortunately this bill does neither and was written by two men most closely responsible for the lack or oversight at Fannie and Freddie.

[Stuck in Seattle]

Anything that promotes stability and financial transparency is a good thing. Unfortunately this bill does neither and was written by two men most closely responsible for the lack or oversight at Fannie and Freddie.
+1. But as Obama is an intellectual giant, lets all bow before the greatness of another POS bill.