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August 28, 2011

Calling FSOC, Calling FSOC, Calling FSOC

The financial crisis is not over.  The financial system is still weak.  Taxpayers are still footing the bill for the last crisis and will be doing so likely for decades.  If we ever really got to see the real condition of a number of big banks, no one knowledgeable would be surprised to see that they were insolvent or in very deep trouble. We have 15 million unemployed, another 10 million working part time who want to work full time, millions of Americans still losing their homes, millions more families have lost their health insurance, and the shameful list of the costs of the crisis goes on and on.  

People like to deny it, but the facts can’t be escaped:  the US financial crisis has metastasized into a jobs/unemployment crisis, a crisis of public finances (largely created by the costs imposed on federal and state budgets as a result of the crisis) and an economic crisis, within the context of an overall ongoing banking/financial debacle.  

Yet, Wall Street, its well-funded front groups from think tanks to trade groups to academics, it’s regulatory cheerleaders and allies, of which there are inexplicably still many, not to mention its bought-and-paid for army of political allies, lobbyists, PR-spin-misters, and hangers-on, all claim the crisis is over and the only thing holding back our economy from morning in America are unnecessary and counter-productive regulations, which in Wall Street’s view are virtually all regulations. 

The latest example is Capital One’s desire to buy ING, which by any sensible measure is unnecessary and almost certainly likely to create yet another too-big-to-fail financial institution that will have to be bailed out during the next financial crisis.  Why anyone in their right mind would do anything to create another bank that could lay claim to taxpayer dollars and raid our treasury is beyond belief.  

Hence, calling FSOC!  It’s supposed to be the Financial Stability Oversight Board after all.  Where is the “Oversight” and where is the “Stability”?

FSOC should step up and say NO to this purchase.  Only problem is that the Fed, a key member of FSOC, appeared ready to rubber stamp this merger, at least until Barney Frank and others started raising questions about it a short time ago.  As a result, the Fed announced late on Friday (surprise!) that there would be additional review and opportunity for public input.  Well, thank you for that, but one has to wonder if there’s any real likelihood the Fed will say “no” at the end of that process.  

Washington Post columnist Steve Pearlstein wrote a terrific, must-read column today on why this is both wrong and dumb.  What he didn’t do was ask, where are all the protections that are supposed to be in place to prevent this?  

Calling FSOC, Calling FSOC, Calling FSOC……………..the only question is will there be any answer?  If they answer, is there any interest in “financial stability” or “oversight” at the Financial Stability Oversight Council? 



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