19 March 2012

Opening the Fraud Gates: New JOBS Bill 'A Colossal Mistake of Historic Proportions'

"The premise is that the economy and startups are being held back by regulation, a favorite theme of House Republicans for the past 3 ½ years – ignoring completely the banking crisis that caused the recession...

The bill’s proponents point out that Initial Public Offerings (IPOs) of stock are way down. That is true – but that is also exactly what you should expect when the economy teeters on the brink of an economic depression and then struggles to recover because households’ still have a great deal of debt."

I think this is just what America needs: many more IPO's from the financial sector with much less disclosure and transparency, and the weakening of Sarbanes-Oxley and what few investor protections still remain.

Even though Obama chooses not to enforce them, and investigate and prosecute very little, regulations still have a mild dampening effect on the predatory frenzy that we enjoyed in the 1990's under Bill Clinton and the tech bubble, and under Bush II with the Housing and derivatives bubble.

So the solution to unemployment, debt, and fraud is -- wait for it -- more debt and more fraud. And even though it won't gain many new jobs outside of the boiler rooms and penny stock hustlers let's call it JOBS.

This is in case you were under the illusion that the Democrats were any more committed to reform than the Republicans. These jokers are only bipartisan when it comes to taking their marching orders from their masters on Wall Street.

The White House is putting its chips on the CEO defense, and is feigning uninvolvement with the process, being too busy on other matters to be concerned with the very reason that his supporters elected him.  

Personally I cannot understand why people don't just vote most of the incumbents out of office, essentially firing them for non-performance, and let them go find real jobs.

We have learned nothing. And it will happen again. And it will be worse.

Baseline Scenario
A Colossal Mistake of Historic Proportions: The “JOBS” Bill
By Simon Johnson
March 19th, 2012

From the 1970s until recently, Congress allowed and encouraged a great deal of financial market deregulation – allowing big banks to become larger, to expand their scope, and to take on more risks. This legislative agenda was largely bipartisan, up to and including the effective repeal of the Glass-Steagall Act at the end of the 1990s. After due legislative consideration, the way was cleared for megabanks to combine commercial and investment banking on a complex global scale. The scene was set for the 2008 financial crisis – and the awful recession from which we are only now beginning to emerge.

With the so-called JOBS bill, on which the Senate is due to vote Tuesday, Congress is about to make the same kind of mistake again – this time abandoning much of the 1930s-era securities legislation that both served investors well and helped make the US one of the best places in the world to raise capital. We find ourselves again on a bipartisan route to disaster.

The Senate needs to slow down and do its job – we have two legislative bodies for a reason and the Senate’s historical role is partly to serve as a check on enthusiasms that may suddenly sweep the House. To pass this legislation on Tuesday would be a grave mistake.

The idea behind the JOBS bill is that our existing securities laws – requiring a great deal of disclosure – are significantly holding back the economy.
The bill, HR3606, received bipartisan support in the House (only 23 Democrats voted against). The bill’s title is JumpStart Our Business Startup Act, a clever slogan – but also a complete misrepresentation.

The premise is that the economy and startups are being held back by regulation, a favorite theme of House Republicans for the past 3 ½ years – ignoring completely the banking crisis that caused the recession...

Where are the supposed guardians of our financial system?

The White House is reportedly taken with the idea of crowd-financing and wants a quick political win in the form of legislation; the Obama administration is poised to concede too much to financial sector interests, again. The Treasury Department likes to claim it provides “adult supervision” for all matters financial, yet it is conspicuously absent from serious conversation around this legislation. And he much-vaunted Financial Stability Oversight Council turns out, again, to be a meaningless paper tiger.

The securities industry special interests are naturally out in force – strongly supported by Senator Charles Schumer of New York and Majority Leader Harry Reid. Reports of the death of Wall Street lobbying power have been greatly exaggerated.

Financial deregulation was the result of decades-long delusion and bipartisan consensus. A major undermining of our securities law seems likely to take place on Tuesday – in a rushed moment of legislative madness.

Read the rest here.