Way to Go, Congress

Without all the yowling that accompanied recent changes in our insurance-regulated health care system, which actually don’t qualify as major reform, Congress is well on the way to passing a major reform bill that will have long-lasting beneficial effects for all of us.

Legislation to put controls on Wall Street shenanigans and the high-handed robbery practiced by credit card issuers hardly drew a ripple of interest in the media compared to the hue and cry about health care adjustments. Yet the financial reform measure is much more significant. It undoes a whole lot of ill-advised deregulation dating back to the Reagan years and rampant throughout Clinton’s time in office and both Bush administrations.

Could any members of those administrations actually have believed that bankers and brokers would regulate financial dealings in the interests of our citizens? Ridiculous. It is a government function to establish a financial system and to control it. Period. That’s not socialism, or fascism, or any other kind of ism. It’s just plain common sense.

The financial giants rolled out their big guns and bankrolls and lobbied hard against any return to controls that history showed work, plus a few more to counter creative (read crooked) dealings they thought up in recent years. For once, Congress listened to the American people, not the lobbyists.

I’ve laid some harsh criticism on our Representatives and Senators of late, but this time they deserve a round of applause. They proved that our system of government can work to serve us.

Bring the Sheriff Back to Town

A whole lot of us thought deregulation was the way to go when our hero Ronald Reagan made it a pillar of his campaign in 1980. After all, wasn’t free enterprise the American way, something to be taken literally? And with less government interference, business people would just naturally be freer to lead us to prosperity, and wouldn’t that be wonderful?

So we ran roughshod over what we saw as a misguided regulator crowd. Laws were changed. Officials were admonished to be kinder and gentler to the very guys they were supposed to be watching, because, after all, American business leaders could be trusted. And, of course, private enterprise does everything better than government. It can even regulate itself, we were told.

Well, American business leaders can be trusted. Their job is to operate efficiently and maximize profits for their shareholders. They can be trusted to work hard to make their operations successful. There is nothing wrong with that. Without guidelines about what is permissible, though, financiers and business people face too much pressure to produce large short-term profits, and do it quarter after quarter. That was part of the problem when we went overboard with deregulation. Caution became a dirty word. Many individuals crossed the line and committed fraud. Others had no ethics to begin with, and gleefully took advantage of the new deregulated situation.

Somewhere along the line, we forgot the lessons of the not-so-distant past. Government programs that did work in combating effects of the Great Depression included considerable regulation of our financial institutions. That inspired confidence, which along with wartime spending, lifted us out of economic disaster. In the late 1980s we should have learned the lesson again when relaxed regulation of Savings and Loans created an expensive bailout crisis. We quickly forgot about that and went on our merry deregulation way.

We ignored two very fundamental things about human nature. First, like it or not, greed is a major motivator of Homo sapiens. Second, many of us like to think we are considerably smarter than we really are.

Let’s face it; most of us simply do not understand the complexities of high finance. We haven’t a clue about what’s going on with derivatives, hedge funds, credit-default swaps, and exotic mortgage-backed securities. Hedge fund managers don’t even reveal how they are investing the money entrusted to them! Investors are supposed to just have faith.

Ignorance about high-level money matters is not confined to the middle and lower classes. The wealthy often don’t understand sophisticated financial deals, either. They, however, can hire accountants, lawyers, and other expensive advisors to protect their interests and make big profits for them. We common folks simply are unable to do that. We have neither the money nor the contacts.

We are the minnows in the financial pond. It should come as no surprise that the big fish just ate a whole lot of us little fish. They almost always do. This time, we suffered the additional indignity of being forced to pay the costs of the meal.

We must empower our government to closely monitor and regulate our financial institutions simply because we cannot protect ourselves from greedy executives and the predators who are ever-ready to pick our pockets to benefit themselves or their clients.

We need to get the sheriff and a whole lot of deputies back into our financial community right now. We need to back them up by restoring many old regulations and creating some stiff new ones, and we need to cheer them on as they round up the wrongdoers and hang them high. We need enterprise that is both free and fair.