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The cost of the next financial crisis

After spending a year working on a complex and hotly disputed bill to overhaul financial regulations, House and Senate lawmakers ran into one last controversy: how to pay for it. The Congressional Budget Office estimated that HR 4173 would cost almost $20 billion over 10 years to carry out the new rules -- part of the price tag being the cost of dismantling big, failing banks. 

House and Senate lawmakers initially agreed to levy a new tax on big banks, hedge funds and private equity firms, with the rate based on the riskiness of their holdings (the greater the risk, the higher the tax). But led by Sen. Scott Brown (R-Mass.), the handful of Senate Republicans who had supported the bill -- and whose votes were needed to overcome a GOP filibuster -- objected.

Negotiators then came up with a bit of accounting gimmickry. They found they could cut the government's expenses by billions of dollars by ending the Troubled Asset Relief Program immediately, several months ahead of schedule. They also proposed to increase the premiums that big banks pay for deposit insurance. Because the federal deposit insurance fund needed to be shored up anyway, the move killed two birds with one stone.

Clever, right? There's just one problem, as the Times' editorial board points out today: the change shifted the burden of the fees from risky activities by Wall Street players onto the safe checking and savings accounts held by consumers. In other words, it spreads the cost of guarding against the next meltdown onto the people who weren't responsible for the last one.

Still, everyone should benefit from having a more effective financial regulatory system, just as everyone suffered from the failures of the current one. And more thorough oversight doesn't come cheap. Nor does it help to craft a bill that can't get the 60 votes needed to get through the Senate. (The House passed the conference report on HR 4173 Wednesday; the Senate is expected to take it up in a couple of weeks.) So what should Congress do? Take our unscientific poll, leave a comment, or both!

-- Jon Healey

 

Comments () | Archives (6)

The comments to this entry are closed.

alex


The republican’s weren’t worried about the deficit when that big insurance company and their friends the Wall Street execs were giving themselves bonuses with taxpayer money!!! Next election – let Congress feel the sting of the unemployment lines!!! No more raping and pillaging the middle class!!! – How many years have you paid taxes? 30? 40? Your government bails out bankers and Wall Street execs using your tax dollars – but unemployment is allowed to expire? What happened to "by the people" or "for the people"? Or are the big campaign contributors the only "people" who count to congress? They are playing games AGAIN FOR THE THIRD TIME while you are wondering how to feed your kids? Figure it out! Malfeasance – Failure of a public official to perform their duties!!! Next Election MAKE YOURSELF MATTER BY VOTING!!! 10% unemployment carries 10% of the vote! Use it!! Fire them all next election or recall every Congress member NOW for Malfeasance – Failure of a public official to perform their duties!!! Next Election - Lets get people elected who actually represent all the People- this current congress represents only special interest groups!


Don’t re-elect or even better Recall your senator or congressman that voted no to extended benefits.Failur of an elected official to do their job is malfeasance.

Here's how you do it:

go to:
http://www.ehow.com/how_2096900_recall-us-senator.html

The list is as follows:

goto:
http://www.ehow.com/how_2096900_recall-us-senator.html

The senators voting no are:

Alexander (R-TN)
Barrasso (R-WY)
Bennett (R-UT)
Bond (R-MO)
Brown (R-MA)
Brownback (R-KS)
Bunning (R-KY)
Burr (R-NC)
Chambliss (R-GA)
Coburn (R-OK)
Cochran (R-MS)
Collins (R-ME)
Corker (R-TN)
Cornyn (R-TX)
Crapo (R-ID)

DeMint (R-SC)
Ensign (R-NV)
Enzi (R-WY)
Graham (R-SC)
Grassley (R-IA)
Gregg (R-NH)
Hatch (R-UT)
Hutchison (R-TX)
Inhofe (R-OK)
Isakson (R-GA)
Johanns (R-NE)
Kyl (R-AZ)
LeMieux (R-FL)
Lugar (R-IN)
McCain (R-AZ)
McConnell (R-KY)
Nelson (D-NE)
Risch (R-ID)
Roberts (R-KS)
Sessions (R-AL)
Shelby (R-AL)
Snowe (R-ME)
Thune (R-SD)
Vitter (R-LA)
Voinovich (R-OH)
Wicker (R-MS)
Alexander (R-TN)
Barrasso (R-WY)
Bennett (R-UT)
Bond (R-MO)
Brown (R-MA)
Brownback (R-KS)
Bunning (R-KY)
Burr (R-NC)
Chambliss (R-GA)
Coburn (R-OK)
Cochran (R-MS)
Collins (R-ME)
Corker (R-TN)
Cornyn (R-TX)
Crapo (R-ID)
DeMint (R-SC)
Ensign (R-NV)
Enzi (R-WY)
Graham (R-SC)
Grassley (R-IA)
Gregg (R-NH)
Hatch (R-UT)
Hutchison (R-TX)
Inhofe (R-OK)
Isakson (R-GA)
Johanns (R-NE)
Kyl (R-AZ)
LeMieux (R-FL)
Lugar (R-IN)
McCain (R-AZ)
McConnell (R-KY)
Nelson (D-NE)
Risch (R-ID)
Roberts (R-KS)
Sessions (R-AL)
Shelby (R-AL)
Snowe (R-ME)
Thune (R-SD)
Vitter (R-LA)
Voinovich (R-OH)
Wicker (R-MS)
Alexander(R-TN)
Barrasso(R-WY)
Bennett(R-UT)
Bond(R-MO)
Brown(R-MA)
Brownback(R-KS)
Bunning(R-KY)
Burr(R-NC)
Chambliss(R-GA)
Coburn(R-OK)
Cochran(R-MS)
Collins(R-ME)
Corker(R-TN)
Cornryn(R-TX)
Crapo(R-ID)
DeMint(R-SC)
Ensign(R-NV)
Enzi(R-WY)
Graham(R-SC)
Grassley(R-IA)
Graham(R-NH)
Hatch(R-UT)
Hutchison(R-TX)
Inhofe(R-OK)
Isakson(R-GA)
Johanns(R-NE)
Kyle(R-AZ)
LeMieux(R-FL)
Lugar(R-IN)
McCain(R-AZ)
McConnell(R-KY)
Nelson(R-NE)
Risch(R-ID)
Roberts(R-KS)
Sessions(R-AL)
Shelby(R-AL)
Snowe(R-ME)
Thune(R-SD)
Vitter(R-LA)
Voinovich(R-OH)
Wicker(R-MS)

If one of these is your senators, and you live in the right state, start a recall or don’t re-elect!!!

John

600 TRILLION DOLLARS going to the same CROOK bankers in a 1.5 QUADRILLION DOLLAR DERIVATIVE that robbed the American People in the first place. Thats like giving the criminals a steak dinner and letting them go with more money in their pockets!!!! This Banker Reform bill will allow the FEDERAL RESERVE(private offshore bank owned by four families) to have unlimited power and buy up any bank or monetary instituion that has to the with the economy. If this isnt a criminal hostile takeover by fiat then i dont know what is.
INCUMBENTS ARE IN TROUBLE! Democrats and Republicans are geting slammed on the polls and getting the BOOT becuase of they are getting caught red handed helping in the foriegn takeover!!!
www.infowars.com

avatar666

Read the wall street journal if you want to know why Obamanomics has failed.

http://online.wsj.com/article/SB10001424052748704629804575325233508651458.html?mod=WSJ_hp_mostpop_read

Jon Healey

We have now veered unrecognizably off-topic. This poll isn't about electoral politics or Obamanomics -- Avatar666, you seem to have forgotten that housing bubble burst in 2007 and Wall Street melted down in 2008, well before Obama took office. I've fixed a glitch in the site so that the poll should be easier to see and vote on, so let's try to focus on the question at hand -- how should we pay for the cost of re-regulating Wall Street?

H Pope II

We don't need this monstrosity of a bill. The liberals are playing games and the conservatives who were in charge of the FDIC, the Fed and SEC fell asleep at the switch along with financial oversight by Frank and dodd. There is already sufficient regulation in existence if more power needs to be added to existing regs do so but we certainly don't need a 2300 page bill that nobody understands and is full of ambiguities and does nothing to reform Fannie and Freddie

Skeptical

With apparently overwhelming disdain for just about all incumbants' performance, it looks like the political party committees are about to watch their access and control the the ever-important government legislative committees become skewered. This ought to catch someones' attention. It is possible for a party to fade into non-existance without influence. Lets see.


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The Opinion L.A. blog is the work of Los Angeles Times Editorial Board membersNicholas Goldberg, Robert Greene, Carla Hall, Jon Healey, Sandra Hernandez, Karin Klein, Michael McGough, Jim Newton and Dan Turner. Columnists Patt Morrison and Doyle McManus also write for the blog, as do Letters editor Paul Thornton, copy chief Paul Whitefield and senior web producer Alexandra Le Tellier.



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