Bush Wants Fed to Have More Power
I like what JEANNINE AVERSA, AP Economics Writer wrote, "Under an ambitious Bush administration plan, the Federal Reserve would take on the unwieldy role of uber cop in charge of financial market stability." Uber cop of our economy. Is that what we want? Howard Chernick, economics professor at Hunter College, said, "I would prefer not putting all my eggs in the Fed's regulatory basket." Anthony Sabino, a professor of law and business at St. John's University said of the centralizing of all regulatory duties at the Federal reserve "The cataclysmic mistake is that if you eliminate so many 'eyes' that monitor the markets, and the single eye, no matter how super, misses something, then catastrophe,".Is the administration using our situation to give the Fed more power the right decision? John McCain things so as he welcomed Paulson's recommendations. "I think consolidation of the various supervisory bureaucracies is very important recognition that we are in a global economy, and transparency and closer oversight is necessary," The Democrats were skeptical and wondered why the administration would propose the plan now when it will have little or no effect on our current crisis. 
Hillary Clinton said "No amount of rearranging the deck chairs can hide the fact that our housing and credit markets are in crisis and they are sinking deeper every day." Its yet to be seen if this plan will ever pass through congress or all the red tape which is doubtful. It would be hard to combine 5 bureaucratic regulatory agencies into the powers of the Federal Reserve.The Hope now plan, no affiliation with Barrack's campaign, is doing the best good for our housing crisis. With the help of the Hope Now alliance, the mortgage industry is helping more than 160,000 families a month to keep their homes either by developing more realistic repayment plans, or by modifying their existing loans.
Here is a part of a great article i found @ heritage.org:
The private sector is working effectively to sort through the problems in both the housing and financial markets by acknowledging its mistakes, admitting its losses, and working to keep troubled but credit-worthy borrowers in their homes. Yet Congress seems determined to "do something." Before it acts, Congress ought to consider a few simple questions:
- Is the real intent to prop up values and bailout homeowners or investors?
If so, then Congress should understand that their good intentions will come to naught, and may do great harm by creating even more uncertainty. For example, Senator Isakson's (R–GA) proposal for a $15,000 refundable tax credit proposal would do nothing to help current homeowners stay in their homes.
- If the intention is to improve the working of the markets, can the legislation be implemented soon enough to matter?
Representative Barney Frank (D–MA) and Senator Chris Dodd (D–CT) have proposed legislation effectively injecting the Federal Housing Authority (FHA) into the already operating Hope Now alliance. However, there is little chance that this would have any direct effect on homeowners until late in the fall of 2008 and less chance that it would add to what Hope Now is already accomplishing.
- Would
the effects of the legislation disrupt the normalizing market processes
already underway in the housing sector, thus prolonging the period of
recovery?
The Frank–Dodd bill and similar approaches threaten to disrupt and slow the private sector's efforts to help troubled borrowers, because either borrowers or lenders may believe they could get taxpayer-subsidized terms under the new FHA-based arrangements when they do become available.
- Would the
effects of the legislation disrupt the normalizing market processes
already underway in the financial sector, thus prolonging its period of
recovery?
Financial markets are working diligently to correct the mistakes that have led to enormous losses. The circumstances are difficult, even with the current known legal and regulatory frameworks. Congressional threats to impose intrusive new regulations on financial markets represent yet another new and ill-defined source of uncertainty. The result would likely be a quick halt to many of these private corrective actions.
- Would the legislation make sense in the absence of current troubled conditions in the housing sector or financial markets?
If the legislation is ineffective in the near term, then at least it should be good long-term policy. Of particular concern is the inclination to expand the roles of the housing GSEs and the FHA and to create new ad hoc tax provisions relating to housing. A greater role for these agencies would not have prevented the current troubles, would not do so in the future, and would expose taxpayers to greater future costs.
Many American homeowners are facing financial hardships resulting from onerous mortgages and falling home values. Many investors are facing financial losses as the risky instruments they bought in happier times decline in value. These processes must work through to conclusion for the economy to regain a sound footing, and the private sector is working effectively toward this end.
Congressional action cannot change this reality, except by prolonging and exacerbating the situation. Congress should focus its energies on policies to strengthen the economy coming out of the current slowdown.
J.D. Foster, Ph.D., is Norman B. Ture Senior Fellow in the Economics of Fiscal Policy in the Thomas A. Roe Institute for Economic Policy Studies at The Heritage Foundation.
nice article...more here than anything i see in trad media lately!
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just wanted to add this:
"When you or I write a check there must be sufficient funds
in our account to cover that check, but when the Federal Reserve
writes a check, it is creating money."
-- Boston Federal Reserve Bank
Source: in a publication titled "Putting It Simply"
http://quotes.liberty-tree.ca/quote_blog/Boston.Federal.Reserve.Bank.Quote.B241
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