April 1, 2008
Doing Something About the Financial MessBy Christopher Chantrill
The Bush administration launched another plan Monday to Do Something about the mortgage mess. In a major speech Treasury Secretary Hank Paulson proposed a Blueprint for a Modernized Financial Regulatory Structure.
This is Part Three of the Bush administration's plan to Do Something.
Part One is to have the Federal Reserve System print lots of lovely money.
Part Two is the plan to have the United States Treasury drop millions of tax rebate checks out of helicopters.
Part Three, the one just announced, is a plan to play musical chairs with the federal agencies charged with financial regulation. For starters, the Securities and Exchange Commission will be merged with the Commodity Futures Trading Commission.
Predictably, the New York Times views the proposed changes as a relaxation of regulatory standards and a cave-in to laissez-faire. In a news analysis article Nelson D. Schwartz and Floyd Norris call the Treasury's Bluleprint a "reluctant eye on Wall Street."
This reluctant action is a plan that, according to Damian Paletta and Kara Scannell at The Wall Street Journal, gives broad new powers to the Federal Reserve System.
Apart from the Fed's new role as as a broad "market stability regulator" the plan would create two new regulatory bodies, a
Also included in the reluctant reform is a new agency to oversee the mortgage industry.
After Part Three of the Bush administration's plan there is still Part Four, the plan from committee chairmen Senator Christopher Dodd (D-CT) and Rep. Barney Frank (D-MA) to assist Democratic voters with a Super FHA. Under their plan to assist distressed homeowners, reported by The Politico,
There is a common thread to all these government actions. All of them fail to think seriously about how we got here, and how the major political and economic actors contributed to the mess. Like me, you might want some answers to the following questions about the current mortgage mess:
Maybe the problem with the financial system is the central role that government plays, especially given its role as the No. 1 debtor. Maybe there's another way.
Last week David Brooks advertised the efforts of a new generation of "social entrepreneurs" and their philosophy for solving social problems.
We conservatives know where that comes from. It comes from F.A. Hayek, Nobel laureate and conservative god.
There must be a decentralized, Hayekian way to build a financial system that is not based on government debt. But who will lead the way?
Christopher Chantrill is a frequent contributor to American Thinker. See his roadtothemiddleclass.com and usgovernmentspending.com. His Road to the Middle Class is forthcoming.