This week’s Blogger’s Briefing, hosted by The Heritage Foundation, gave an in-depth look at one of the most important issues that is currently in the hands of Congress, but not really in the minds of the American people: Financial Regulatory Reform. Health Care has dominated the headlines, but the issues coming into the fray with Financial Regulatory Reform are becoming increasingly important as the Congress moves ever closer to legislative action. The featured speakers took on this issue by looking at it through the eyes of the overall state of the Economy and recent publications that have showed the degree of decline that the US has seen over the last few years, most notably the Index of Economic Freedom; and then a closer look at what Congress is doing to “repair” the financial sector.
Bill Beach, Director of The Heritage Foundation’s Center for Data Analysis, discussed the recently released Index of Economic Freedom and other indexes relating to it. This is the 16th year they have published the study; but what is important about this year was that the United States, for the first time, earned a distinction in the index that they had never earned before: “For the 1st time in the sixteen year history of the index, the United States was scored as a mostly free country.” The index has usually rated the United States as a “free” index, so this was something of extreme importance in terms of where the United States is at as a country with regard to the state of our economy. He also talked about Heritage’s Index on Dependence on Government, and how for the United States it has risen over 31% in less than a decade. Beach made the point about how in the last 40-plus years the ways in which civil-society dependency is something that is lacking because people are no longer being “helped, to get stronger.” Beach also described the effect this has on those receiving the aid: “We become a number, we become a statistic,” and he described how the incentive is taken away when Government becomes the sole caretaker. He also talked about reforming the tax system in the country, “tax reform is desperately needed.” The theme that Beach continued to stress is that the recently released indexes are showing a pattern of decline, a decline in the trends and momentum of the US Economy.
Todd Zywicki, Professor at the George Mason School of Law, discussed the latest movement in the Senate with regards to the Financial Regulatory Reforms that are being crafted by Senators Dodd, and Corker. “This was a power-grab like something you’ve never seen before,” was how he described the initial stages of the Consumer Financial Protection Agency when it was first introduced last summer; though Zywicki concedes it has been scaled back since then. He also made a great point about the unintended consequences of such vast reforms and regulations: “If you ban terms that are related to risk, obviously what you’re doing is you’re laying the seeds for the next financial catastrophe.” Zywicki also talked about the politics of it all, “what’s so striking to me… is that the people get it,” and they understand the issues, and that the elitists think they know what is better for them. Lastly, he talked about why banks still aren’t lending and he broke it down into what many have already been trying to tell policy makers: UNCERTAINTY. “You can’t lend in an environment like we have now, where nobody knows what the transformation of the Economy is going to look like a year from now.” This was one of the most salient points made, because it brings clarity to why the Economy has been so rattled by the Pelosi-Obama-Reid agenda, and what legislation like the “stimulus”, “cap & tax”, and a “government takeover” of Health Care can do to an already troubled Economy: not only do they hinder the growth, they exasperate the decline.
There was a good amount of Q&A that followed, and a number of attendees at the Bloggers Briefing made some interesting additional points about the Financial Reform fight that is currently underway in D.C., and what the future might hold for this very important, but far less covered issue.