There are dozens of stories related to this, so I’m going to try to filter to the most relevant.
For those of you who watch events in the market, you’ll have heard that the Federal Reserve Board is speaking with a number of interest groups and organizations, mainly with the intent of modifying and ‘updating’ rules concerning financial regulation.
I smell a rat.
It seems like most financial instutions have been at the trough for the last few months, claiming financial instability if they don’t get massive handouts, whipping the media into a grand and delirious frenzy.
I suspect that this situation is the financial equivalent of 9/11, giving the powers that be the public perception that ‘something must be done’. This ‘something’ is a complete overhaul that will likely favour a very small handful of financial institutions.
Let’s start here: The New York Times.
And here, reminding ourselves that the Federal Reserve Board is not a public institution.
Basically, the proposal is to merge a wide array of Federal and State regulatory bodies into a small collection of “Commissions” that would monitor and control pretty much all aspects of financial markets. In an effort to summarize the Commissions, I think they are as follows (but it seems like some windows have been left open for more groups):
1. A Securities Commission that would include the Commodity Futures Trading Commission
2. Mortgage Origination Commission
3. Prudential Financial Regulator to lead the banks
4. An insurance commission
What’s staggering about all of this is that it has been laid out conveniently amidst the ‘wild storm of panic’ that is being whipped up by mainstream media, which makes me feel like these sweeping changes will have the same impact on American (and global) financial activity similar to how the Patriot Act influenced world travel.
Empty your bottles will become ’empty your wallets’.
Let’s take commodities. Putting regulation of commodities – our food, our electricity, our fuels – gives a new private institution the ability to take prices to a whole new level without the threat of public interference.
Look at Enron and what happened to California when the entire electricity market was deregulated. It nearly bankrupt one of America’s most influential economic powerhouses.
So, imagine Enron running our lives when it comes to chicken or beef or corn prices. Or gas. Or electricity.
It ain’t gonna be pretty.