MSNBC’s Karen Finney posting in U.S. News yesterday (in part):
Arguments have also been made that same-sex marriage dilutes the institution of marriage, just as similar arguments suggested that interracial marriage diluted the white race. My personal favorite absurd justification says that (despite the idea that we are all God’s children and loved equally) gay marriage is against the laws of God and nature. That argument was used [in 1963] by Leon M. Bazile, the judge in the initial case against the Lovings, who said:
“Almighty God created the races white, black, yellow, malay and red, and he placed them on separate continents. And but for the interference with his arrangement there would be no cause for such marriages. The fact that he separated the races shows that he did not intend for the races to mix.”
☞ Prompting a reader named Marcus to post:
I read the judge’s 136 page ruling from start to end last night. When I read the parts quoted from the brochures used to inform voters about proposition 8 I was shell shocked. I could not believe the state of california (intentionally not capitalized) allowed such hate-filled misinformative junk to be circulated around as proper guiding information to the voters. It’s now perfectly clear to me why proposition 8 passed.
WHAT’S IN THE FINANCIAL REFORM BILL
Yesterday I cited a very bright, hugely self-confident right-winger who declared to the world that the 2,300-page financial reform bill was a disaster, based on his certainty that no one, least of all he, knew what was in it.
Here’s what’s in it, as laid out yesterday in Boston by Treasury Deputy Secretary Neal Wolin.
He recounts the financial disaster the President inherited (you already know that part) . . .
. . . lays the blame at a lot of feet . . .
Legislative loopholes allowed large parts of the financial industry to operate without oversight, transparency, or restraint.
Policy makers were too slow to fix a broken system.
And there is no doubt that, across the country, many Americans took on more debt than they could afford; and that many firms encouraged them to do just that.
So we all share responsibility for the crisis. And we all share responsibility for reform.
. . . and then explains what’s been done and where we go from here:
Last month, when President Obama signed into law a comprehensive financial reform bill – the most significant financial reforms since the 1930s – we took a tremendous step forward in meeting that responsibility.
The reforms that are now the law of the land will help us rebuild a stronger, safer financial system; a system that is pro-growth and pro-investment; a system that does what it ought to do – help businesses finance growth, help Americans save for retirement and borrow to finance an education or a home, without fear of deception or abuse; a system that does these things without letting risks build up unseen and unmanaged; a system that is far less prone to panic and collapse.
A lot has been said about the financial reform law, so I want first to step back and look – in broad strokes – at what the new law accomplishes.
> First, these reforms give us the tools to look beyond the safety of individual firms or markets to the health of the broader financial system. Through the Financial Stability Oversight Council, supported by the Office of Financial Research, regulators will have the ability and the responsibility to identify and manage systemic risk.
And the Federal Reserve will have examination and enforcement authority over all bank holding companies, as well as any non-bank financial companies designated by the Council – so that the largest, most complex financial institutions will be subject to consolidated oversight, regardless of their corporate form.
> Second, these reforms require regulators to impose stronger prudential standards – robust, risk-based capital, leverage, and liquidity standards to guard against both firm-specific failures and systemic shocks.
> Third, the reforms establish a comprehensive regulatory framework for the derivatives markets – the source of so much risk and uncertainty in the recent crisis. And at the same time, through a narrowly tailored end-user exemption, the reforms ensure that commercial firms will be able to hedge their risks effectively and efficiently.
> Fourth, the reforms put an end to the problem of “Too Big to Fail.” They give the federal government the authority to shut down and break apart large non-bank financial firms whose failure threatens the broader system.
No firm can be insulated from the consequences of its actions. No firm can be protected from failure. No firm will benefit from the perception that taxpayers will be there to break their fall. The new law makes absolutely clear that taxpayers will never be asked bear the costs of a financial firm’s failure.
> Finally, the reforms address the fundamental failure of consumer protection that plagued our system in the years leading up to the crisis.
The Bureau of Consumer Financial Protection, an independent entity within the Federal Reserve, will have one mission: to promote transparency and consumer choice, and to prevent abusive and deceptive practices.
Now, the law does much more. But these are the core elements: a focus on systemic risk; heightened prudential standards; comprehensive regulation of derivatives; an end to “too big to fail;” robust consumer protection.
Flaws in each of these areas helped precipitate or prolong the crisis. This bill targets those flaws – and fixes them.
Enactment of the legislation is, of course, not the end of the financial reform effort. Now we must turn to the important work of implementation.
Those of us in government – policy-makers, regulators, and supervisors – must make sure that these reforms meet the promise of the law; that these reforms provide both the necessary protections against financial excess and the benefits of financial innovation.
We have already begun a rigorous implementation process. The work cannot be done overnight. It will take time.
Each of the agencies involved in implementing financial reform – Treasury, the Federal Reserve, the SEC, the CFTC, the OCC, the FDIC and others – are in the process of outlining how they propose to prioritize the rules they now have to write and setting initial dates for when the public will be able to comment on draft rules.
Our work involves writing new rules in some of the most complex areas of modern finance. It involves consolidating authority now spread across multiple agencies. It involves setting up new institutions for coordination, crisis management, consumer protection, and for indentifying systemic risks. It involves negotiations with countries around the world.
Now, without getting ahead of that process, let me provide you with a brief introduction to the steps we expect to take in four of the most important areas over the next several months.
First, consumer protection.
Strengthening consumer protection doesn’t mean more regulation, it means better regulation – to help consumers get the information they need to make the choices that are right for them.
We will move quickly to give consumers simpler disclosures for credit cards, auto loans and mortgages, so that they can make better choices, borrow more responsibly, and compare costs.
For example, in place of the two separate, inconsistent and overly-complicated federal mortgage disclosure forms that borrowers receive today, there should be one clear, simple, user-friendly form. We intend to move quickly to make that happen – and we will seek and test the best ideas from consumers, mortgage companies, and experts alike.
In addition, we will be inviting public comment on new national underwriting standards for mortgages, so that we can begin to shape the reforms of the mortgage market.
And we are working quickly to get the CFPB up and running, to consolidate rule-making and enforcement responsibilities that today are split, inefficiently and ineffectively, among seven different regulatory agencies.
Second, we are moving forward on reforming the GSEs and our broader housing finance system.
In a few weeks, the Treasury Department will host leading academics, consumer and community organizations, industry participants and other stakeholders for a conference on the future of housing finance. We’ll use that conference to seek input from across the political and ideological spectrum. And early next year, we will put forward our plan for reform.
Third, we are going to move quickly to implement the reforms of the derivatives market. We will work with the Fed, the SEC and the CFTC to outline specific quantitative targets for moving standardized derivatives trades onto central clearing houses. And we will accelerate the international effort internationally to put in place consistent global standards for these critical markets.
Fourth and finally, we are working quickly to establish new rules on capital to constrain excessive risk taking and leverage in the largest global financial institutions.
This is a global effort.
Financial firms will have to hold more, higher-quality capital than they did before the crisis.
Firms will be required to hold more capital against the types of risky trading-related assets and obligations that caused so much financial damage during the crisis.
Bigger firms and more complex, interconnected firms will have to hold relatively more capital than smaller firms.
New capital requirements will be supplemented with new global standards for liquidity management, so that firms can withstand a severe shock in liquidity without deepening the crisis by selling assets in a panic or cutting credit lines indiscriminately.
Getting this right is essential.
We know that capital requirements must be raised. But we also know that if we set them too high too fast, we could hurt economic recovery or simply end up pushing risk outside of the regulated financial system.
So we will move quickly, but we will move carefully. There will be a reasonable transition period, with three years to meet the new minimum requirements and an additional period to build up buffers beyond those minimums.
And it is important to note that, because of the rigorous bank stress tests we conducted in 2009, the U.S. financial system is in a very strong position internationally to adapt to the new rules.
Those are the areas where we – the Treasury, the regulators – will be focused in the coming months. We are committed to moving with speed, with transparency, and with a commitment to ensuring that our financial system remains the most competitive financial system in the world.
But as I said at the start, reform is a shared responsibility. And so to those in the financial industry, I encourage you not to wait on Washington before embracing change. As we work together to rebuild our financial system, responsible private sector leadership is every bit as important as responsible regulation and supervision.
Now, before I close, let me just say this: As with any issue of public policy as significant and consequential as financial reform, there are bound to be differences of opinion. But I think no one who witnessed the events of the past two years can deny that the these reforms are necessary and long, long overdue.
No doubt, some people will continue to claim – as they have over the past year – that these reforms will bring about the end of American enterprise. So let me offer some perspective.
Four years after the great crash of 1929, still in the depths of a Great Depression, another generation rose to meet the great challenge of their day by establishing bold new bank protections and new securities laws.
At the time, just as now, the opponents of reform predicted grave danger.
In 1933, Time Magazine wrote, in reference to the bill that created the FDIC, “through the great banking houses of Manhattan last week ran wild-eyed alarm. Big bankers stared at one another in anger and astonishment. A bill just passed… would rivet upon their institutions what they considered a monstrous system. Such a system, they felt, would not only rob them of their pride of profession but would reduce all U.S. banking to its lowest level.”
A year later, in 1934, the President of the Chamber of Commerce, speaking of the Securities Exchange Act said, “it is the opinion not only of Stock Exchange brokers, but of thoughtful business men that its sweeping and drastic provisions would seriously affect the legitimate business of all members of Stock Exchanges and investment banks, with resultant disastrous consequences to the stock market; would greatly prejudice the interest of all investors; would tend to destroy the liquidity of banks and would impose on corporations of the country serious handicaps in the practical operation of their business.”
We all know how wrong those warnings were. Far from weakening American firms, destroying the liquidity of American banks, and handicapping the operation of business, the creation of the FDIC and the ’34 Act – along with the ’33 Act – helped lay the foundations for the most stable, most competitive, most innovative, most transparent and most trusted financial system in the world.
Like the banking and securities laws of the 1930s, the Dodd-Frank Act lays the foundation for a stronger, safer financial system – innovative, creative, competitive, globally leading, and far more stable than the one we have today.
These reforms will benefit American business and the American people, by providing a more stable source of financing for the investments and innovations that will drive economic growth in the years ahead.
Across America, millions of Americans still feel the pain of the economic downturn. But we are on the road to recovery. We are repairing the damage caused by the crisis. And by implementing financial reform, we are taking the hard but necessary steps to ensure that our financial system leads the world in this century, just as it did in the last.
Thank you very much.
OK, sorry: Monday, Matt Miller’s Great Idea (Unless You Want to Read It Today)
Quote of the Day
When it comes to banking and money, the four most dangerous words in the world are, 'This time, it's different.'~Allan Sloan, Newsweek, March 13, 1995, on repeal of Glass-Steagall
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