There can’t be a person anywhere in the world who doesn’t know that the financial markets are in big trouble.
All the fingers are pointing at the USA for having caused the whole debacle. This, even though the London offices of some financial institutions actually pulled the trigger that set off the collapse.
Zooming in on the US, looking for the real culprit, our lens is pointed towards the lack of regulation, for which we can thank the Republicans, and eight years of Bush policies. We are told this, at least weekly, sometimes daily, by Congressional Democrats and President Obama.
Thomas DiLorenzo, professor of economics at Loyola College in Maryland and a member of the senior faculty of the Mises Institute provides a short list of regulatory items attributed to The Fed. The list does not confirm the lack of regulation.
DiLorenzo says “The Fed alone – a secret government organization that is accountable to no one and which has never been audited – performs hundreds of regulatory functions, in addition to recklessly manipulating the money supply. And it is just one of numerous financial regulatory agencies (the SEC, Comptroller of the Currency, Office of Thrift Supervision, FDIC, and numerous state regulators also exist). In a Fed publication entitled ‘The Federal Reserve System: Purposes and Functions,’ it is explained that ‘The Federal Reserve has supervisory and regulatory authority over a wide range of financial institutions and activities.’
DiLorenzo says “That’s the understatement of the century. Among the Fed’s functions are the regulation of:”
* Bank holding companies
* State-chartered banks
* Foreign branches of member banks
* Edge and agreement corporations
* US state-licensed branches, agencies, and representative offices of foreign banks
* Nonbanking activities of foreign banks
* National banks (with the Comptroller of the Currency)
* Savings banks (with the Office of Thrift Supervision)
* Nonbank subsidiaries of bank holding companies
* Thrift holding companies
* Financial reporting
* Accounting policies of banks
* Business “continuity” in case of an economic emergency
* Consumer-protection laws
* Securities dealings of banks
* Information technology used by banks
* Foreign investments of banks
* Foreign lending by banks
* Branch banking
* Bank mergers and acquisitions
* Who may own a bank
* Capital “adequacy standards”
* Extensions of credit for the purchase of securities
* Equal-opportunity lending
* Mortgage disclosure information
* Reserve requirements
* Electronic-funds transfers
* Interbank liabilities
* Community Reinvestment Act subprime lending requirements
* All international banking operations
* Consumer leasing
* Privacy of consumer financial information
* Payments on demand deposits
* “Fair credit” reporting
* Transactions between member banks and their affiliates
* Truth in lending
* Truth in savings
That’s a pretty comprehensive list, the result of 96 years of bureaucratic empire building by Fed bureaucrats.
Do you think this indicates “too little regulation” of financial markets?
– Thomas J. DiLorenzo