Addendum to Obama’s Financial Reform

I don’t normally post more than once a day, but this quote is sooooo on topic, I couldn’t resist.

Obama and the libs held a “financial responsibility summit” in the White House. The Heritage Foundation reported, President Obama held a “fiscal responsibility” summit designed to “send a signal that we are serious” about putting the nation on sounder financial footing.”

The Washington Post’s Dana Milbank said…

“Holding a ‘fiscal responsibility summit’ at the White House in the middle of a government spending spree is a bit like having an Alcoholics Anonymous meeting at a frat house on homecoming weekend.”

Continuing from yesterday: Wall Street "Bailouts"

Mitch McConnell is holding the line on the newest dem/lib financial catastrophe from Senator Dodd. The dems want to bring the bill to the floor for “debate.” We’ve seen before what the dems call “debate.” McConnell isn’t buying it. He wants to add some “amendments” that effectively eviscerates the worse portions of the bill. It also a tactic to block any movement on it.

Here’s an analysis of the Wall Street bailout bill by the Heritage Foundation.

Morning Bell: CBO Confirms You’re on the Hook for Wall Street Bailout Bill

Posted By Conn Carroll On April 26, 2010 @ 9:51 am In Enterprise and Free Markets

President Barack Obama’s favorite rhetorical device is to lecture the American people about what are and are not “legitimate” public policy arguments. So throughout the health care debate, President Obama insisted that it was “not legitimate” to claim that “a public option is somehow a Trojan horse for a single-payer system.” This despite the fact that Reps. Barney Frank (D-MA), Jan Schakowsky (D-IL), Anthony Weiner (D-NY) [2] and Nobel Prize winning New York Times columnist Paul Krugman were all caught on video [3] explaining to single-payer advocates that the public option was exactly that.

Now the President is bringing the same audacity to the financial regulatory debate, telling [4] a handpicked audience at New York’s Cooper Union: “Now, there is a legitimate debate taking place about how best to ensure taxpayers are held harmless in this process. But what is not legitimate is to suggest that we’re enabling or encouraging future taxpayer bailouts, as some have claimed. That may make for a good sound bite, but it’s not factually accurate.”

Before President Obama continues to go around accusing others of lacking legitimacy, he should read the official cost estimate [5] of the financial regulation bill released by the Congressional Budget Office last Thursday. Assessing the budgetary impact of the $50 billion that “systemically important financial firms” would have to pay in assessments to pay for the bill’s “Orderly Resolution Fund,” the CBO writes:

The total amount collected from assessments is estimated to be about $58 billion through 2020. But such assessments would become an additional business expense for companies required to pay them. Those additional expenses would result in decreases in taxable income somewhere in the economy, which would produce a loss of government revenue from income and payroll taxes that would partially offset the revenue collected from the assessment itself.

In other words, these financial firms have to get that $58 billion dollars from somewhere, and that somewhere is you. Now the Obama administration may argue that they actually oppose the creation of the resolution fund. But American taxpayers should be even more frightened when they find out why the Obama administration opposes it. The New York Times [6] reports: “The Obama administration does not support the $50 billion fund, partly out of concern that more money may be needed if one or more big financial firms ever collapse and that creating a fund could make it difficult to authorize more money.” AEI’s Peter Wallison details [7] CBO how this provision could put taxpayer on the hook for much larger sums:

If the Dodd-Obama resolution plan is ever actually put to use, the direct or indirect costs could be many times greater. For example, the bill authorizes the Federal Deposit Insurance Corporation to borrow from the Treasury “up to 90 percent of the fair value of assets” of any company the FDIC is resolving. Yet one institution alone—Citigroup—has assets currently valued at about $1.8 trillion. The potential costs of resolving it (not to mention others) would be spectacularly higher than $50 billion. In short, the $50 billion in the resolution fund is a political number—a fraction of what the FDIC is authorized to borrow and spend.

Why would this vast sum be necessary? The Dodd bill has one answer. It says that the FDIC “may make additional payments,” over and above what a claimant might be entitled to in bankruptcy, if these payments are necessary “to minimize losses” to the FDIC “from the orderly liquidation” of the failing firm.

In other words, the agency would be able to borrow huge sums so that it could make more generous payments to creditors than they would receive in a bankruptcy. Generous payments to creditors would certainly make unwinding a firm “orderly”—but it would also encourage lending to the too-big-to-fail financial institutions while disadvantaging smaller, less favored institutions. This in itself will have a profound and destructive effect on competition.

This is the core problem of the Dodd-Obama Wall Street Bailout Bill: it gives the same regulators that missed the beginning of the last crisis the authority to engineer the exact same politically motivated bailouts (see General Motors [8], Chrsyler [9]) for the next one.

There is a better way [10]. Congress should modernize bankruptcy laws to create an expedited method to restructure and close large and complex financial firms. Such an approach would not give regulators virtually unlimited powers and would free the process from political interference by giving control to an unbiased court system that already has extensive experience with complex modern firms.

If the dems gain control of the nation’s financial system, the damage to our capitalist system and economy is incalculable. This bill is no bad that Obama’s butt buddy, Warren Buffet want an exclusion for his current derivatives. This makes the upcoming fall 2010 elections even more critical. Not only to we need to block any further action by the dems on every front, but we need the votes to de-fund, block implementation and eventually repeal Obamacare and TARP. According to Rasmussen, 58% of the country want Obamacare repealed.

Continuing from yesterday: Wall Street "Bailouts"

Mitch McConnell is holding the line on the newest dem/lib financial catastrophe from Senator Dodd. The dems want to bring the bill to the floor for “debate.” We’ve seen before what the dems call “debate.” McConnell isn’t buying it. He wants to add some “amendments” that effectively eviscerates the worse portions of the bill. It also a tactic to block any movement on it.

Here’s an analysis of the Wall Street bailout bill by the Heritage Foundation.

Morning Bell: CBO Confirms You’re on the Hook for Wall Street Bailout Bill

Posted By Conn Carroll On April 26, 2010 @ 9:51 am In Enterprise and Free Markets

President Barack Obama’s favorite rhetorical device is to lecture the American people about what are and are not “legitimate” public policy arguments. So throughout the health care debate, President Obama insisted that it was “not legitimate” to claim that “a public option is somehow a Trojan horse for a single-payer system.” This despite the fact that Reps. Barney Frank (D-MA), Jan Schakowsky (D-IL), Anthony Weiner (D-NY) [2] and Nobel Prize winning New York Times columnist Paul Krugman were all caught on video [3] explaining to single-payer advocates that the public option was exactly that.

Now the President is bringing the same audacity to the financial regulatory debate, telling [4] a handpicked audience at New York’s Cooper Union: “Now, there is a legitimate debate taking place about how best to ensure taxpayers are held harmless in this process. But what is not legitimate is to suggest that we’re enabling or encouraging future taxpayer bailouts, as some have claimed. That may make for a good sound bite, but it’s not factually accurate.”

Before President Obama continues to go around accusing others of lacking legitimacy, he should read the official cost estimate [5] of the financial regulation bill released by the Congressional Budget Office last Thursday. Assessing the budgetary impact of the $50 billion that “systemically important financial firms” would have to pay in assessments to pay for the bill’s “Orderly Resolution Fund,” the CBO writes:

The total amount collected from assessments is estimated to be about $58 billion through 2020. But such assessments would become an additional business expense for companies required to pay them. Those additional expenses would result in decreases in taxable income somewhere in the economy, which would produce a loss of government revenue from income and payroll taxes that would partially offset the revenue collected from the assessment itself.

In other words, these financial firms have to get that $58 billion dollars from somewhere, and that somewhere is you. Now the Obama administration may argue that they actually oppose the creation of the resolution fund. But American taxpayers should be even more frightened when they find out why the Obama administration opposes it. The New York Times [6] reports: “The Obama administration does not support the $50 billion fund, partly out of concern that more money may be needed if one or more big financial firms ever collapse and that creating a fund could make it difficult to authorize more money.” AEI’s Peter Wallison details [7] CBO how this provision could put taxpayer on the hook for much larger sums:

If the Dodd-Obama resolution plan is ever actually put to use, the direct or indirect costs could be many times greater. For example, the bill authorizes the Federal Deposit Insurance Corporation to borrow from the Treasury “up to 90 percent of the fair value of assets” of any company the FDIC is resolving. Yet one institution alone—Citigroup—has assets currently valued at about $1.8 trillion. The potential costs of resolving it (not to mention others) would be spectacularly higher than $50 billion. In short, the $50 billion in the resolution fund is a political number—a fraction of what the FDIC is authorized to borrow and spend.

Why would this vast sum be necessary? The Dodd bill has one answer. It says that the FDIC “may make additional payments,” over and above what a claimant might be entitled to in bankruptcy, if these payments are necessary “to minimize losses” to the FDIC “from the orderly liquidation” of the failing firm.

In other words, the agency would be able to borrow huge sums so that it could make more generous payments to creditors than they would receive in a bankruptcy. Generous payments to creditors would certainly make unwinding a firm “orderly”—but it would also encourage lending to the too-big-to-fail financial institutions while disadvantaging smaller, less favored institutions. This in itself will have a profound and destructive effect on competition.

This is the core problem of the Dodd-Obama Wall Street Bailout Bill: it gives the same regulators that missed the beginning of the last crisis the authority to engineer the exact same politically motivated bailouts (see General Motors [8], Chrsyler [9]) for the next one.

There is a better way [10]. Congress should modernize bankruptcy laws to create an expedited method to restructure and close large and complex financial firms. Such an approach would not give regulators virtually unlimited powers and would free the process from political interference by giving control to an unbiased court system that already has extensive experience with complex modern firms.

If the dems gain control of the nation’s financial system, the damage to our capitalist system and economy is incalculable. This bill is no bad that Obama’s butt buddy, Warren Buffet want an exclusion for his current derivatives. This makes the upcoming fall 2010 elections even more critical. Not only to we need to block any further action by the dems on every front, but we need the votes to de-fund, block implementation and eventually repeal Obamacare and TARP. According to Rasmussen, 58% of the country want Obamacare repealed.

Buy, sell, Trade: The business of Wall Street

I’m continually dismayed how many “conservatives” are anti-business. Every time a dem/liberal/socialist/marxist creates some scheme that will hurt business and by extension capitalism, these “conservatives” get in line. I quote the term “conservative” because how can a person be truly conservative if they are so ignorant about how our country and capitalism works?

The current bit of fraud coming from the dems in Washington is their so-call “Financial Reform.” It’s no reform. If they wanted to actually do some “Financial Reform” they’d be all over Frank and Dodd and tearing apart Fannie Mae and Freddie Mac. That’s where the real crimes are being committed and I wouldn’t be surprised if Frank and Dodd was at the center of it all.

Be that as it may, CitiBank is the current target. This a really strange since CitiBank has been under government control for a year and gave almost $1,000,000 to Obama’s campaign fund. Supposedly CitiBank did not notify the proper authorities about some hedge funds and when shorting some stocks. From the information coming available on the internet, CitiBank complied with all the current law and regulation. It’s all a setup to control the entire financial system of the country.

Hedge Funds are the current boogyman of the dems. There are a lot of so-call conservatives (like RINO Olivia Snow) who think Hedge Funds are bad, evil and MUST BE CONTROLLED OR ELIMINATED. Far from it, hedge funds are a creation of the business cycle and the only reason they’re being reviled is that some very smart and savvy people made money—in some cases a lot of money, using them. If someone made/earned money playing the stock market, it MUST be evil. Just ask any socialist.

For those who don’t know what a hedge fund is, let me educate you a bit about how stocks are bought and sold on the exchanges and what are derivatives.

Buy low, sell high. This is the basic principal of stock trades. Buy some shares, wait for the price to go up, sell the shares. The difference is your profit known as capital gains. Short-term capital gains occur when you hold the stock less than a year before selling it. Long-term capital gains occur when stock is held a year or more before selling it.

You can also make money when the price per share goes down. This is called “shorting” the stock. It is just like “buy low, sell high” except the sequence of events is reversed. It’s “sell high, buy low.” So, how can you make money selling a stock before you buy it? By selling short. The mechanism is that you buy the right to sell the stock at a given price. If/when the price of the stock goes down, you buy it at the lower price and then sell it at the previous guaranteed higher price. The difference between the price you bought it and the guaranteed selling price is your profit. If the price of the shorted stock goes up, you must buy at the higher price and you lose money. When shorting stocks you must have sufficient funding in your trading account to cover the difference if the shorted stock goes the wrong way.

A number of large financial companies went bankrupt when their trader was wrong. The knowledge of what to buy, whether the price goes up or down and how to make money in either case marks the professional trader. Some call playing the stock market gambling. For the uneducated and uninformed, it is. It isn’t for the professional.

That’s why they make BIG bucks. When they are right, they make a ton of money for their employers and the employers want to keep the real performers working for them. To do that, they pay well and if the trader meets his goals, he’s rewarded well with bonuses. Many traders prefer to have a better bonus system and a lesser salary because they get a better reward for their performance. It’s called incentives.

Derivatives work the same way as buying and sell stock, except that instead of owning actual stocks, you own options for the stocks. The classic option function, a Call, is taught using real estate as an example. A person is interested in some real estate, but isn’t sure if he can afford it or there is some reason why he must delay the purchase. It he waits, someone else can buy the property before he’s ready. So, the person will buy an option-to-buy. This gives the prospective buyer a right-to-buy for a specific period of time at a given price. If the prospective buyer cannot follow-through all he is out is the price of the option. If the price of the property goes up, the buyer has the price locked-in at the lower value.

The options for stocks works the same way. For instance, I think the stock of AAA Company will go up but I don’t have the money to pay the full amount of the stock. Instead I will buy options for a given number of shares with an expiration date six months in the future. If the price today is $5 a share and in six months it grows to $7 a share, I can exercise my option-to-buy at the end of six months, sell the stock and make a profit of $2 a share. The actual mechanism of buying the shares and selling them is automatically performed your brokerage house. You can keep the shares if you have the money in your account to pay the full price. Most traders don’t and just retain the profit difference.

The act of buying an option and selling it high is a Call. Again like selling stock, if the price goes down, you must pay the difference and lose the price of the option.

There is also the option equivalent of shorting stocks called a Put. The Call and Put are the basic functions of derivatives. There are other more complex trades but basically they all revolve around Calls and Puts.

Hedges can deal with either stocks or options. In most cases financial institutions and trader do a little of both. There is an old adage called, “Don’t put all your eggs in one basket.” This applies to stock trading as well. Traders, like gamblers, cannot read the future. They think a stock will go up or down but none are absolutely sure so they “hedge” their bets. If a trader thinks he can buy XX shares and sell them at a profit, he may make some hedge trades to offset his losses in case the trade goes toes-up. In some cases, he may short some shares of the same stock. Or he may buy some Puts to offset some Calls. Or he made buy some shares in a hedge fund.

Another way of thinking of hedges is car insurance. We pay a monthly premium to cover our loss in case of an automobile accident. That insurance is a hedge against possible loss. We don’t want to have to file a claim, but we also don’t want to pay heavily for damages or a new car if something happens. That’s is what a hedge—or investment in a hedge fund is all about.

All these functions are necessary for a smooth operating trading system. There have been a number of mechanisms built over the decades to prevent wild swings in market prices such as those that lead to the 1929 crash. Bear in mind there has been many stock market crashes since 1929 and before. When the system breaks the market repairs itself if left alone. Some companies lose money, some go bankrupt, some tighten their belt and rebuild their profit margins. The bottom line, however, is that in almost every case, the market has fixed itself without external manipulation.

When the government interferes with the natural corrective activities of the market, stocks continue to go down. The external constraints of government blocks or diminishes the forces that would fix the situation. Bailouts allow companies to continue the practices that got them in trouble. If there were no bailouts, the failing companies would either have to put their houses in order—or go bankrupt and out of business. The more governmental control, the less the market can react and the downward slide continues. Traders lose their usual means of determining share and price movement, previous market trends no longer function and many traders stand pat or make fewer trades.

This has been a long post. Much longer than I’d intended. I played the market a while ago as a hobby. I had a small brokerage account and I made some money with options. Sometimes a lot. I also lost money on trades. All-in-all I broke even when I quit a couple of years ago. It was an education.

So many people are ignorant how our market and financial system works. That leaves them vulnerable to the dems and their lies. Unfortunately, many “conservatives” don’t know nor care how the market works and get suckered into the dem/liberal schemes. It’s their own ignorance that trips them up.

Before you fall for the “new” financial reforms proposed by Obama, educate yourself and discover the truth what these proposal will do to the market and to you.

A number of brokerage houses, such as ThinkorSwim and OptionsXpress have a virtual trading system that lets you play instead of investing actual money. These are real trading houses but you only need a few thousand dollars to open an account. Yes, that’s a lot of money, but you don’t have to spend it to get the training available for free. (Disclaimer: I have had accounts in the past with both brokerage houses. I no longer have any connection with either nor receive any remuneration from either business.)

Cartoons of the week: Chuck Asay

Chuck Asay had a number of good cartoons this week and I just wanted to share some with you.

As you may have heard, Supreme Court Justice Stevens has announced his retirement later this year. He’s ninety and is still as wrong and stupid as he was when he was younger. He never met a leftist, socialist, statist issue he didn’t like—and that was on his good days.

Obama continues his destructive plans for our economy and the national debt continues. But, what does it matter? The parasite class of the county won’t be paying the taxes.

Finally, Florida’s Charlie Crist is running for the US Senate on the Republican ticket. the only problem is that he’s losing against Rubio. So what does a good RINO like Crist contemplate? Running as an independent and hope to pull enough republican votes—to allow a democrat being elected to office.


Gangster Government

I’m an unabashed fan of Michael Barone. He writes in a number of publications from the Wall Street Journal, the Washington Examiner to Politico to The American Thinker and others. He wrote this article that appeared in Rasmussen Reports. Barone accurately describes the tactics being used by Obama and the democrats. They are a Gangster Government.

Thursday, April 22, 2010

Almost a year ago, in a Washington Examiner column on the Chrysler bailout, I reflected on the Obama administration’s decision to force bondholders to accept 33 cents on the dollar on secured debts while giving United Auto Worker retirees 50 cents on the dollar on unsecured debts.

This was a clear violation of the ordinary bankruptcy rule that secured creditors are fully paid off before unsecured creditors get anything. The politically connected UAW folk got preference over politically unconnected bondholders. “We have just seen an episode of Gangster Government,” I wrote. “It is likely to be a continuing series.”

Fast forward to last Friday, when the Securities and Exchange Commission filed a complaint against Goldman Sachs, alleging that the firm violated the law when it sold a collateralized debt obligation based on mortgage-backed securities without disclosing that the CDO was assembled with the help of hedge fund investor John Paulson.

On its face, the complaint seems flimsy. Paulson has since become famous because his firm made billions by betting against mortgage-backed securities. But he wasn’t a big name then, and the sophisticated firm buying the CDO must have assumed the seller believed its value would go down.

That’s not the only fishy thing about the complaint. Yesterday came the news, undisclosed by the SEC Friday, that the commissioners approved the complaint by a 3-2 party-line vote. Ordinarily, the SEC issues such complaints only when the commissioners unanimously approve.

Fishy thing No. 3: Democrats immediately used the complaint to jam Sen. Christopher Dodd’s financial regulation through the Senate.

You may want to believe the denials that the Democratic commissioners timed the action in coordination with the administration or congressional leaders. But then you may want to believe there was no political favoritism in the Chrysler deal, too. The SEC complaint looks a lot like Gangster Government to me.

The Dodd bill, however, has it trumped. Its provisions promise to give us one episode of Gangster Government after another.

At the top of the list is the $50 billion fund that the Federal Deposit Insurance Corp could use to pay off creditors of firms identified as systemically risky — i.e., “too big to fail.”

“The Dodd bill,” writes Democratic Rep. Brad Sherman, “has unlimited executive bailout authority. That’s something Wall Street desperately wants but doesn’t dare ask for.”

Politically connected creditors would have every reason to assume they’d get favorable treatment. The Dodd bill specifically authorizes the FDIC to treat “creditors similarly situated” differently.

Second, as former Bush administration economist Larry Lindsey points out, the Dodd bill gives the Treasury and the FDIC authority to grant an unlimited number of loan guarantees to “too big to fail” firms. CEOs might want to have receipts for their contributions to Sen. Charles Schumer and the Obama campaign in hand when they apply.

Lindsey ticks off other special favors. “Labor gets ‘proxy access’ to bring its agenda items before shareholders as well as annual ‘say on pay’ for executives. Consumer activists get a brand new agency funded directly out of the seniorage the Fed earns. No oversight by the Federal Reserve Board or by Congress on how the money is spent.”

Then there are carve-out provisions provided for particular interests. “Obtaining a carve-out isn’t rocket science,” one Republican K Street lobbyist told the Huffington Post. “Just give Chairman Dodd and Chuck Schumer a s—load of money.”

The Obama Democrats portray the Dodd bill as a brave attempt to clamp tougher regulation on Wall Street. They know that polls show voters strongly reject just about all their programs to expand the size and scope of government, with the conspicuous exception of financial regulation.

Republicans have been accurately attacking the Dodd bill for authorizing bailouts of big Wall Street firms and giving them unfair advantages over small competitors. They might want to add that it authorizes Gangster Government — the channeling of vast sums from the politically unprotected to the politically connected.

That can boomerang even against the latter. Goldman Sachs employees gave nearly $1 million to the Obama campaign and $4.5 million to Democrats in 2008. That didn’t prevent Goldman from being shoved under the SEC bus.

Gangster Government may look good to those currently in favor, but as some of Al Capone’s confederates found out, that status is not permanent, and there is always more room under the bus.

Michael Barone is senior political analyst for The Washington Examiner.

COPYRIGHT 2010 THE WASHINGTON EXAMINER

See Other Political Commentaries

See Other Commentaries by Michael Barone

Views expressed in this column are those of the author, not those of Rasmussen Reports.

Gangster Government

I’m an unabashed fan of Michael Barone. He writes in a number of publications from the Wall Street Journal, the Washington Examiner to Politico to The American Thinker and others. He wrote this article that appeared in Rasmussen Reports. Barone accurately describes the tactics being used by Obama and the democrats. They are a Gangster Government.

Thursday, April 22, 2010

Almost a year ago, in a Washington Examiner column on the Chrysler bailout, I reflected on the Obama administration’s decision to force bondholders to accept 33 cents on the dollar on secured debts while giving United Auto Worker retirees 50 cents on the dollar on unsecured debts.

This was a clear violation of the ordinary bankruptcy rule that secured creditors are fully paid off before unsecured creditors get anything. The politically connected UAW folk got preference over politically unconnected bondholders. “We have just seen an episode of Gangster Government,” I wrote. “It is likely to be a continuing series.”

Fast forward to last Friday, when the Securities and Exchange Commission filed a complaint against Goldman Sachs, alleging that the firm violated the law when it sold a collateralized debt obligation based on mortgage-backed securities without disclosing that the CDO was assembled with the help of hedge fund investor John Paulson.

On its face, the complaint seems flimsy. Paulson has since become famous because his firm made billions by betting against mortgage-backed securities. But he wasn’t a big name then, and the sophisticated firm buying the CDO must have assumed the seller believed its value would go down.

That’s not the only fishy thing about the complaint. Yesterday came the news, undisclosed by the SEC Friday, that the commissioners approved the complaint by a 3-2 party-line vote. Ordinarily, the SEC issues such complaints only when the commissioners unanimously approve.

Fishy thing No. 3: Democrats immediately used the complaint to jam Sen. Christopher Dodd’s financial regulation through the Senate.

You may want to believe the denials that the Democratic commissioners timed the action in coordination with the administration or congressional leaders. But then you may want to believe there was no political favoritism in the Chrysler deal, too. The SEC complaint looks a lot like Gangster Government to me.

The Dodd bill, however, has it trumped. Its provisions promise to give us one episode of Gangster Government after another.

At the top of the list is the $50 billion fund that the Federal Deposit Insurance Corp could use to pay off creditors of firms identified as systemically risky — i.e., “too big to fail.”

“The Dodd bill,” writes Democratic Rep. Brad Sherman, “has unlimited executive bailout authority. That’s something Wall Street desperately wants but doesn’t dare ask for.”

Politically connected creditors would have every reason to assume they’d get favorable treatment. The Dodd bill specifically authorizes the FDIC to treat “creditors similarly situated” differently.

Second, as former Bush administration economist Larry Lindsey points out, the Dodd bill gives the Treasury and the FDIC authority to grant an unlimited number of loan guarantees to “too big to fail” firms. CEOs might want to have receipts for their contributions to Sen. Charles Schumer and the Obama campaign in hand when they apply.

Lindsey ticks off other special favors. “Labor gets ‘proxy access’ to bring its agenda items before shareholders as well as annual ‘say on pay’ for executives. Consumer activists get a brand new agency funded directly out of the seniorage the Fed earns. No oversight by the Federal Reserve Board or by Congress on how the money is spent.”

Then there are carve-out provisions provided for particular interests. “Obtaining a carve-out isn’t rocket science,” one Republican K Street lobbyist told the Huffington Post. “Just give Chairman Dodd and Chuck Schumer a s—load of money.”

The Obama Democrats portray the Dodd bill as a brave attempt to clamp tougher regulation on Wall Street. They know that polls show voters strongly reject just about all their programs to expand the size and scope of government, with the conspicuous exception of financial regulation.

Republicans have been accurately attacking the Dodd bill for authorizing bailouts of big Wall Street firms and giving them unfair advantages over small competitors. They might want to add that it authorizes Gangster Government — the channeling of vast sums from the politically unprotected to the politically connected.

That can boomerang even against the latter. Goldman Sachs employees gave nearly $1 million to the Obama campaign and $4.5 million to Democrats in 2008. That didn’t prevent Goldman from being shoved under the SEC bus.

Gangster Government may look good to those currently in favor, but as some of Al Capone’s confederates found out, that status is not permanent, and there is always more room under the bus.

Michael Barone is senior political analyst for The Washington Examiner.

COPYRIGHT 2010 THE WASHINGTON EXAMINER

See Other Political Commentaries

See Other Commentaries by Michael Barone

Views expressed in this column are those of the author, not those of Rasmussen Reports.