Barney Frank charged by Obama to draft new regulatory scheme for financial companies.          

The Obama Administration is poised to implement radical new financial controls over the US economy. Instead of financial and banking decisions being made by many individuals acting in the free market, an elite group of bureaucrats will issue edicts that will affect the well being of all Americans. These new rules will change the way our financial markets operate, especially relating to risk. The ability of commercial banks, investment banks, equity partnerships, and hedge funds to create innovative financial products will be severely restricted.

Fed Chairman Bernanke, and, at the behest of President Obama, House Financial Services Committee Chairman Barney Frank are now working on a plan to regulate the economy to control financial institutions in a way not seen since the days of FDR’s New Deal.

According to news reports from the Wall Street Journal:

Federal Reserve Chairman Ben Bernanke said regulators should be given broad new powers to oversee financial markets, reflecting the Fed’s evolving view that a more aggressive government hand is needed to ensure the future safety of the financial system.

Among his recommendations were tougher capital requirements for big banks, limits on investments by money-market mutual funds, and the introduction of some mechanism that would allow the U.S. to wind down big financial institutions and possibly run them temporarily.

… The recommendations were largely consistent with measures being pushed by House Financial Services Committee Chairman Barney Frank (D., Mass.), who is expected to be a key architect of the new financial regulation. There was one exception. Mr. Frank has said any changes would have to discourage “excessive risk taking” by executives, which he argues helped fuel the financial crisis. Mr. Bernanke didn’t touch on compensation practices in his speech.

Mr. Frank said he was supportive of Mr. Bernanke’s proposed outline. He said the speech reinforced for him why the Federal Reserve should be given powers to broadly oversee the safety of the entire financial system. Currently, various regulators oversee discrete parts. “I don’t know who else could do it,” Mr. Frank said.

President Barack Obama has charged Mr. Frank with developing an outline of how a new system would work in time for the Group of 20 meeting in early April.

These political leaders are using this crisis to further their long held desire to increase federal control of the economy. This is no secret: liberals such as Mr. Frank have strong beliefs about the positive role of government in the economy. They believe capitalism is inherently unstable and that the guiding force of the government is necessary to protect citizens from its perceived ravages. They believe they are capable of making certain economic decisions that should not be entrusted to its citizens, such as bankers and investors.

… Continue reading Obama Administration Plans Major New Controls Over Economy