Yesterday, I listened to President Barack Obama’s speech outside the White House where he ‘appointed’ – well, not officially – Elizabeth Warren as head of a new consumer watchdog group, the Consumer Financial Protection Bureau.
Great! That’s just what we need: Another Washington bureaucracy that will spend millions of dollars hiring thousands of employees who, presumably, will save us from all of those bad bankers and wily Wall Street executives who allegedly have been stripping us of our hard-earned dollars and who, allegedly, led us head-long into this cash-strapped recession.
Well, it didn’t quite happen that way, even though Mr. Obama implied yesterday that it did when he held Wall Street and the banks solely responsible for the national financial fiasco which hit hard in the fall of 2008 and which is now lingering on for who knows how long.
The fact is that the policies set into motion by two powerful Congressional committees chaired by Congressman Barney Frank of Massachusetts and by outgoing Senator Chris Dodd of Connecticut were highly influential in setting up the dominoes which would fall with devastatingly shattering impact years later.
Complicit in this disaster were two quasi-federal lending agencies, Fannie Mae and Freddie Mac, both of which were pushing commercial banks to keep lowering lending standards so that more and more unqualified loans could be made to millions of people who would later default on them.
Yes, the banks accommodated this disastrous Washington policy, and Wall Street hedge fund managers who are still running rings around Washington ginned up the financial instruments which sounded the final gong in this game.
But long before the dominoes fell, a few stout-hearted federal employees testified before Barney’s Congressional Committee that the tsunami was coming its way: These people were marginalized, trivialized and told to beat it. Mr. Obama seems to have had a significant loss of memory about these causal factors.
At yesterday’s announcement, the President made an end run around the Senate confirmation process by naming Elizabeth Warren special adviser with full responsibilities for setting up and managing all of the operations for this new consumer agency. In effect, she will be its de facto director until Congress decides what to do about it.
I like this saying, “Government is never more dangerous than when our desire to have it help us blinds us to its great power to harm us – Ronald Reagan.”
Had enough pain yet?
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