Opinion Forum

More Government Control

July 2nd, 2009

Do you like the idea of a bank that works for you, one that can create specialized financial products that suit your needs? Well, your president says ‘fugetaboutit’! Under Obama’s newly-proposed Federal Consumer Protection Agency, banks will no longer be in business to meet meet your individual needs. They will be under strict control of the federal government and will be directed to only meet the needs of Americans who know the least about financial matters.

Why this drastic measure? Well, the government thinks that most people may be too dumb to know when they can or can’t afford something and too dumb to be able to make individual decisions about their finances. They may be right — most people were dumb enough to elect a president who made it very clear during his campaign that individuals are much less important than the masses.

Treasury Secretary Timothy Geithner says, “This agency will have only one mission — to protect consumers,” but that’s a lie. This agency has another, more important mission — to gain complete control of the banking industry. Under the Federal Consumer Protection Agency, in the words of Ed Yingling, president and chief executive of the American Bankers Association, “Basically, the government is deciding what every bank in every circumstance should offer.”

There are cases, of course, where individuals are too ignorant about financial matters to know what’s best for them. But the problem with this new agency — as well as every government agency — is that we will all, once the legislation passes, be in the same category. No individuality is allowed, no risk taking allowed for those who enjoy taking risks, and — another step in the direction that got this country way off course in the beginning — no personal responsibility.

A milestone in this trend of doing away with personal responsibility was when the government decided to buckle under to the insurance industry and force, under penalty of law, every driver to wear a seatbelt. The thought process was that the government’s role was not only to protect people from other people — people must be protected from themselves.

I guess, on a personal note, what bothers and depresses me most about this agency and this ‘no personal responsibility’ trend are that most people seem to be OK with it.

Here are links that will help you learn more about the Federal Consumer Protection Agency:

New Agency – One Mission – To Protect Consumers, Injuryboard.com
Consumer Protection on Wide Scale, The Wall Street Journal

(This article was also posted at My View from the Center.)

Articles written by Harvey Grund
Tags: banking, Consumer Protection Agency, Obama
Categories: Economics, Politics | Comments (13) | Home

13 Responses to “More Government Control”

Clarissa | July 2nd, 2009 at 10:23 am

I agree that the “‘no personal responsibility’ trend” you are talking about just keeps growing. It’s very annoying because it robs us of our agency and transforms us into little kids that need to be patronized. We can see these attempts to avoid responsibility on the part of the people and to infantilize us on the part of the government way too often.

However, I’m not sure I agree with you about the changes to the banking system. I feel it’s more about not trusting the bankers to make intelligent choices. As we have seen, this mistrust has been earned by them and is based on fact.

Dee | July 2nd, 2009 at 3:32 pm

I back Clarissa’s sentiment. My friend got all in my face the other day because I said that I support nationalization of our banking industry. It’s not that I distrust the American public with their financial decisions. It’s that, up until this point, add up all the fine print and the redlining mortgage issue and the inequalities of access to helpful loan products and corporate greed, and you got the financial mess we’re in now. Why did banks screw up so hard? It’s because they tried to game their own system in making even more profit!

Until banks are willing to correct that behavior, maybe they should be pushed around a bit.

Elizabeth Barrette | July 2nd, 2009 at 6:14 pm

If I had been at all impressed with banks’ service and behavior during the last 20 or so years, this might worry me. Given how many times banks have expressed their inability to protect the money I have placed in their care, and their general desire to move money from my account to their pockets, I think that more regulation might help. It’s not like banks are being run competently now. Of course, I’m not impressed with government behavior either. We’ll see who does a more thorough job of screwing up.

Kevin | July 3rd, 2009 at 10:55 am

Brain imaging studies have shown that receiving financial advice from a perceived “expert” actually causes the decision-making part of the brain to shut down, shifting responsibility to the “expert.”

http://blogs.discovermagazine.com/80beats/2009/03/26/expert-but-bad-financial-advice-turns-off-decision-making-in-the-brain/

Of course more studies are needed before we can consider this finding etched in stone, but consider what it is you are advocating here if more studies do confirm these early findings, and I expect that they will. You’re advocating throwing a lot of people to the wolves for something over which they have no control (brain chemistry).

This whole “personal responsibility” meme sounds good in a vacuum. But it is little more than moralizing with scant basis in the cold, hard facts.

Lastly, Clarissa’s point is well taken. Bankers aren’t in the business of looking out for the financial welfare of anyone but themselves. And they do so from a position of having significantly more knowledge of the minutia and the real-life implications than the average customer they’re dealing with. What President Obama is advocating attempts to level the playing field.

Tom | July 3rd, 2009 at 3:37 pm

Kevin, I read the article. Had to check a couple of times to make sure it wasn’t something from The Onion.

I’m not sure I’m getting the point. If people tend to stop thinking for themselves when they get expert advice…well, maybe that’s true. So the idea is that banks should be under government control so people won’t have to take advice from experts or make their own decisions? They’ll then stop thinking for themselves because the government is in charge? That’s better?

If we’re talking about the mortgage and housing default segment of the crisis, that was caused by making loans to people who couldn’t afford them. Plain and simple. Government encouraged it, banks were happy to go along, and people who should have known better didn’t. The answer to that sort of thing is rational government regulation from a distance, which will result in banks performing within certain boundaries and people getting loans who can demonstrate an ability to pay. That’s the way things were working, and working fairly well, before the government got involved.

Or maybe I just don’t understand the discussion.

Harvey | July 3rd, 2009 at 9:25 pm

Tom,

My sole point in this article was that the Obama administration (or perhaps I should say the Obama government since he seems to have a pretty firm control over the House and the Senate) is once again overstepping its Constitutional bounds and “the people” seem to love it.

Leave banking to the bankers — if a bank is obviously cheating people or using unsound practices to “cheat” their customers let the Justice Department step in and either put the bank back in line or shut it down.

In fact leave all businesses to the business owners — if they succeed without bending or breaking laws great, if they fail, let them fail.

Ari | July 4th, 2009 at 5:02 pm

Many people have been afraid to term Obama’s economic policies as Socialist. But the reality is that they are as close to Socialism the US has seen in at least 70 years. Obama and his like-minded advisors are smart enough not to roll out the entire philosophy all at once. Instead, they adroitly tap into anti-establishment populism, exploit the fears of the masses and then propose a socialist policy as the answer. We have seen this in banking, the auto industry, executive pay and it is being attempted in healthcare and the entire manufacturing base via cap and trade.

Kevin | July 4th, 2009 at 5:45 pm

Harvey, I see no rational way to reconcile your apparent laissez faire philosophy with the commerce clause of the Constitution. Further, your appeal to let the Justice Dept. step in runs directly counter to your appeal to reject regulation, since regulation forms part of the basis for the Justice Dept. to step in in the first place.

In any case, a straight-forward reading of the commerce clause clearly doesn’t contain the limitations you seem to find there. Now I know that it’s only “liberals” who believe in… what’s the word you folks use?… ah… “activist judges” except… well… when conservatives do it too. But for some inexplicable reason that kind of activism is deemed good and proper.

I must not have this week’s secret decoder ring…

Atomic Lib Smasher | July 4th, 2009 at 11:34 pm

I think some of the dumb Obamunists might need a civics lesson.. especially on this, the 233rd birthday of an American Republic.

http://www.moonbattery.com/archives/2009/07/fourth_of_july.html

Harvey | July 5th, 2009 at 12:53 am

Kevin, to begin with the common definition of laissez-faire does not exclude or “reject” regulation as you accuse me of promoting; it rejects “governmental regulation of or interference in commerce beyond the minimum necessary for a free-enterprise system to operate according to its own economic laws.” What the Obamanation is doing is WELL beyond the minimum necessary.

By my standards, obviously not yours, that also cancels your argument about the Justice Department; the minimum regulation would be there.

As to the Commerce Clause, in a “straight-forward reading,” it gives Congress the power to: “regulate commerce with foreign nations, and among the several states, and with the Indian tribes.”

What does that have to do with anything I’m talking about?

Oh! I know, you’re combining the Commerce Clause with the “Necessary and Proper Clause” — well if you want to play at that you’re right, the Congress can do any damn thing it wants, within or outside of reason. Are you happy with THAT concept?

Harvey | July 5th, 2009 at 1:02 am

To all participants in this discussion:

I have many strong opinions on many subjects but few are stronger than my feelings for the United States as it was and hopefully as it might be again.

Its just a shame that the country has fallen into the hands of an administration that makes this conversation necessary on the 233rd anniversary of our Declaration of Independence.

Brian | July 6th, 2009 at 12:12 am

Harvey, to be fair, this isn’t the first administration or congress to do this. And I’m fairly certain that they won’t be the last.

The following quote by James Madison sums up rather nicely the limits on the federal government. I cannot undertake to lay my finger on that article of the Constitution which granted a right to Congress of expending, on objects of benevolence, the money of their constituents.

Brian | July 6th, 2009 at 12:21 am

I am always amused by those who stretch “necessary and proper” to fit their conception of what it is that congress has been empowered by the constitution to do.

From Article I Sec 8 (last paragraph)
To make all laws which shall be necessary and proper for carrying into execution the foregoing powers, and all other powers vested by this Constitution in the government of the United States, or in any department or officer thereof.

The “foregoing powers” spoken of here are the powers specifically enumerated within the constitution. Why write “foregoing powers” and “all other powers vested by this constitution” if there had been an intent to empower the federal government with non-enumerated powers? The enumeration of powers at all makes it quite clear that there is a limit to the power of the government. If the government had been intended to have unlimited powers, a formal constitution would have been simply superfluous.