Finance [non] Reform

A few of you wonder why I think that Obama’s finance reform [aka Dodd-Frank] was a dud when the banks are always bitching about it.

Well, there’s a short answer: it has practically no effect. This is despite it weighing in at 30,000+ pages of dense legalese. Its length alone elevates it into celebrated territory in the bureaucrat’s hall of fame, and ensures that for every clause there are pages of exceptions and loopholes sufficient for every bank to wriggle through several times over.

Which is why I think it’s a dud.

It is a swamp in which things that look sensible and useful are surrounded by a mire of trickery so deep that it feels bottomless. And the folks writing those loopholes are the lawyers hired by the banks. As usual.

So while it looks clever and helpful to argue that we ought to separate proprietary trading from customer driven trading – remember the so-called Volcker Rule? –  a plague of attorneys has descended to obfuscate the word proprietary and make it appear indistinguishable from anything customer driven. So infested is the entire thing that the law is yet to be fully completed in any true sense. All those lengthy clauses need thorough interpretation before any regulator could possibly dare throw the book at a cheating bank.

So the banks continue to cheat. And laugh all the way to the … well … to the bank.

It was, of course, always going to be this way. The Republicans refused to cooperate with anything smacking of re-regulation, the administration is infested with Wall Street sympathizers, our regulators are undermanned, underpaid, and under appreciated, and Congress is bought and paid for by the big banks.

Our economy, the real actual live one, not the quaint imaginary one we read about in our economics textbooks, is so riddled through with corruption and old fashioned graft that practically everything we buy is carrying some hidden burden due to the cost of having to buy off Congress to get tax exemptions, protected monopolies, or simply protected subsidies.

And the big banks remain some of the biggest pigs feeding at the trough.

Dodd-Frank fixed squat.