Opposed to new fees, Sen. Scott Brown blocks financial reform

Senate and House conferees on Wall Street reform are reconvening Tuesday because of Republican objections to $19 billion in fees that would be placed on big financial firms.

The meeting follows Sen. Scott Brown's (R-Mass.) letter to the chairmen of the conference committee on Tuesday, in which he said he would oppose the Wall Street overhaul bill as it stands.

In a letter to Rep. Barney Frank (D-Mass.) and Sen. Chris Dodd (D-Conn.), Brown expressed "strong opposition" to the fees that were added in the conference process between House and Senate lawmakers last week.

"If the final version of the bill contains these higher taxes, I will not support it," he said.

Maine Republican Sens. Susan Collins and Olympia Snowe, who like Brown had voted for the Senate version of Wall Street reform, which didn't include the fees, have voiced similar concerns.

The objections have left Senate Democrats scrambling for a way to pass the bill.

Financial reform threat now serves as a White House hammer; soon, it might make U.S. a nation ruled not by law, but by men

Is America moving away from being a nation ruled by law to one ruled by men? That's the question senators should consider this week as they move to vote on Sen. Chris Dodd's financial reform legislation. How the legislation is finalized could have long-term adverse consequences on America's bankruptcy process.

Little thought has been given to that question in the rush to financial reform. But Senate and House legislation would discard 200 years of bankruptcy case law, replacing it with a special, one-of-a-kind resolution authority, managed by the Federal Deposit Insurance Corp.

The agency will soon have absolute authority over failing big banks, empowered to borrow up to 90% of the assets of the companies it seizes and provide unlimited guarantees to "solvent" institutions.

While providing the big banks with a permanent, codified source of bailout funds, the expanded powers of the FDIC will include its mediating with creditors. It will make decisions that bankruptcy judges, legal counsel and courts historically have made. An organization that was founded to provide insurance for depositors will now provide insurance for companies that are too big to fail.

Andrew C. McCarthy: Obama's "geysers of legislation" designed to produce "tsunamis of regulation"

In an inevitable state of ignorance of some of its major provisions, Pres. Barack Obama recently signed a 2,700-page health-care bill. Since then, the president has championed a 1,400-page financial-reform proposal, insisting that it does not provide a blank check for future multibillion-dollar corporate bailouts — but the bill would, in fact, provide a blank check for future multibillion-dollar corporate bailouts.

The point of these geysers of legislation is to produce tsunamis of regulation. Tens of thousands of pages dense with code will shift control of previously private activity to swelling bureaucracies, unaccountable to any but the most wired insiders. In crony socialism as in crony capitalism, what matters is who you know. When it comes to the law, no one can really know what it is.

In his spare time, on April 8, President Obama signed an arms-reduction treaty with Russia. He urges swift ratification of the accord even though, as former U.S. ambassador to the United Nations John Bolton observes, important provisions are still being negotiated. In the spirit of the times, though, the pact would become the law of the land before those details are finalized, while its authors either don’t know what it says or are lying about it. Administration officials told Arizona Republican senators Jon Kyl and John McCain — who will be central to the Senate’s ratification debate — that the treaty referred to missile defense only in the hortatory, non-binding preamble. Yet when the senators looked at the treaty’s binding terms, they found, right there in black and white, a provision (Art. V, para. 3) that would require the United States to refrain from placing “defense interceptors” in existing missile launchers — a severe compromise of American national security.

So when the president hastily pronounced Arizona’s new immigration bill “misguided” and “irresponsible,” Arizona residents — whom the federal government has abandoned to the siege of Mexican warlords, narco-peddlers, and squatters — may be forgiven for snickering. Come to think of it, snickering has become the default reaction to pronouncements on the law by our ex-law-prof-in-chief , particularly those prefaced by his most grating verbal tic, “Let me be clear . . . .”

In the guise of reform, Schumer obligates donors

Schumer has been a champion of Wall Street financial firms for years, particularly hedge funds, yet now is holding himeslf out as a reformer.

It was Schumer who helped organize hedge fund lobbying efforts and campaign contributions, as reported by the NY Times on March 13, 2007:

On a cold evening in late January, Senator Charles E. Schumer invited a who's who of hedge funds to dinner at Bottega del Vino on the Upper East Side of Manhattan. More than $100 billion worth of wealth sat around the table, including Paul Tudor Jones of Tudor Capital; Steven Cohen of SAC Capital; Stanley Druckenmiller of Duquesne Capital; and James Chanos of Kynikos Capital, according to a person who was briefed on the dinner.

Mr. Schumer, the New York Democrat, had some simple advice for the billionaires in his midst: If you want Washington to work with you, you had better work better with one another.

(snip)

Now, Schumer is holding himself out as a leader in the effort to reform Wall Street as part of the effort by Democrats to raise a populist argument in the run-up to the November elections.

Expect Schumer publicly to treat his former Wall Street friends the way he treated a flight attendant, now that the spotlight is on the money shoved deep into his and other Democrats' pockets for years.

Privately, Schumer will see to it that the "reforms" are for show only, so that he can go back to the Wall Street fundraising well again and again and again.

From Bloomberg: Of the $7.4 million contributed by employees of the 100 largest hedge funds and 50 biggest buyout firms in 2005-06, Democrats received $5 million, Federal Election Commission records show. The biggest checks went to congressional campaign committees led by New York Senator Charles Schumer and Illinois Representative Rahm Emanuel, which took in $2.8 million.

Obama picks fake fight; Street smiles pugnaciously

In his self-styled war against Wall Street, President Obama appears to have a powerful ally: Goldman Sachs.

The nation's largest investment bank, famously cozy with top government officials in both parties, has tipped its hand to its shareholders, indicating that major financial "reform" proposals will help Goldman's bottom line.

"Given that much of the financial contagion was fueled by uncertainty about counterparties' balance sheets," Goldman Chief Executive Officer Lloyd Blankfein and President Gary Cohn wrote in a letter at the beginning of the annual report, "we support measures that would require higher capital and liquidity levels, as well as the use of clearinghouses for standardized derivative transactions."

Goldman's executives are calling for two regulations here. First, they want the federal government to restrict free-wheeling, heavily leveraged, high-stakes financial risk taking. Second, they want government to set more rules of the road for trading derivatives -- financial products that are often complex.

These are the very "fat cats" to whom Obama directed his trash talk in January: "If they want a fight, that's a fight I'm willing to have." Well, it looks like they don't really want a fight. It looks like they want more regulation. The question is: What's in it for Goldman?