Tag Archives: regulation

It’s Everybody Else’s Fault

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That’s the claim of Treasury Secretary Janet Yellen, as described in Sunday’s Wall Street Journal editorial. The editors are correct as far as they go, but I do have a quibble and a more serious disagreement with some of the things they said.

First my quibble:

Yet here we are with major banks failing, and the government having to bail out uninsured depositors and offer lifelines to protect bank assets that are underwater.

No, the government most certainly did not have to “bail out” uninsured depositors or offer lifelines to other banks. The Biden administration, through Yellen, chose to do those things. By doing so, though, they set the ugly precedent of bailing out everyone else in all other banks without regard to whether those depositors are FDIC insured and without regard to the risks other banks may or may not be running, the Biden-Yellen blather to the contrary not withstanding. By doing so, Biden and Yellen have indemnified uninsured depositors and careless bankers from risk, laying that risk off onto us taxpayers instead.

My more serious disagreement:

The main culprit [regarding Silicon Valley Bank and the deposit runs at midsize banks] was duration risk from the failure to properly hedge against rising interest rates…. …. There’s no excuse for the examiners at the San Francisco Federal Reserve not to have acted on the problem as the West coast bank regulator.

Again, no. There’s certainly room to decry the failure of the SF Fed regulators to regulate, and those worthies should be terminated for cause over their negligence.

However, the first, proximate, and last responsibility for SVB’s failure and those other banks’ problems lies with the managers of those institutions. Interest rate risk, which underlies duration risk, is the risk taken when buying a debt instrument: when market interest rates rise, the debt instrument’s market price falls, and that reduces the value of the debt instruments already bought—for instance, the long Treasury bonds SVB’s managers had bought in satisfaction of its reserve requirements. Any first year economics student learns that, if he hadn’t already learned it in high school.

Duration risk, which matches long term debt assets with short term debt obligations (or not…) is something that same first-year economics student learns later in that same semester. And it’s something about which any first-year Finance student learns early in the first semester.

It was those managers’ decision to ignore those risks, or their careless laziness in not bothering to deal with those risks, or some combination of the two, that lay at the heart of the failure of the one and the problems of the others. The San Francisco Fed’s failure to act was only a (actually quite minor, given where the primary responsibility, and initiative, lies) contributing factor.

“Orderly Implementation”

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Judge Katherine Menendez, of the Federal District of Minnesota, has ruled a Minnesota State law barring 18-20-yr-olds from obtaining handgun carry permits in Minnesota to be unconstitutional.

Based on a careful review of the record, the court finds that defendants have failed to identify analogous regulations that show a historical tradition in America of depriving 18- to 20-year-olds the right to publicly carry a handgun for self-defense. As a result, the age requirement prohibiting persons between the ages of 18 and 20 from obtaining such a permit to carry violates the Second Amendment.

She based that argument on the Supreme Court’s New York State Rifle & Pistol Ass’n v Bruen ruling in which the Court explicitly required a showing of a national history of regulation of the type contemplated in this or that gun control legislation.

What’s of particular interest here, though, is Minnesota Attorney General Keith Ellison’s reaction to Menendez’ ruling. He wants the judge to stay her ruling pending a potential State appeal, or in the alternative, a stay for 60 days to allow for its orderly implementation.

The first is common enough and not entirely unreasonable. It’s normal to stay a ruling that has a chance of being overruled on appeal in order to prevent the harm that can be done to the ultimately winning side before it wins the appeal.

The last is utterly disingenuous, though. It doesn’t take 60 days to stop blocking 18-20-yr-olds from exercising their Constitutional rights. It doesn’t take a day to do that, with the possible exception of a Sunday, when legal firearm sellers are closed and might need until Monday to receive the rescission of the State law. After all, nothing has changed in any of the other, still in place, requirements surrounding obtaining a firearm; all that’s happening is the removal of one of those requirements.

Evidence!?

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Internationally famed Ersatz Doctor Xavier Becerra, Health and Human Services Secretary, is being called on by Senator Jim Risch (R, ID) to produce the evidence that supports “Dr.” Becerra’s and his HHS’ encouragement for actual doctors to perform “gender affirming care”—like hormone therapies and sex-change surgeries—on minors with gender dysphoria.

In a letter to HHS Secretary Xavier Becerra, Risch and nine of his Republican colleagues from the House and Senate said “HHS has a moral responsibility to ensure its recommendations are evidence-based and not driven by a contentious ideology,” and alleged that HHS is encouraging medical providers to perform “gender affirming care.”
“We are increasingly alarmed that HHS’ advocacy has led health professionals to prescribe dangerous and experimental drugs and surgeries to troubled children—in many cases covered with taxpayer dollars,” the lawmakers wrote.
“‘Gender affirming care’ is far from proper health care given the treatments include experimental hormonal and surgical interventions on children’s bodies that cause permanent damage,” they wrote.

Apart from the medical disasters this sort of child abuse inflicts, there is the intrinsic contradiction in the meaning of “minor,” a contradiction that even Becerra must know: the idea that adolescents—and younger(!)—are capable of consenting to their own major medical and other significant life decisions when they are not capable of consenting, for instance, to having sex (see: statutory rape). Never mind the question of whether or how well an adolescent’s troubled mind can give consent, informed or other.

My prediction of Becerra’s response, should he deign make one: weasel words to the effect of “We ain’t got no evidence. We don’t need no stinking evidence.”

FISA Revamp

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Congress may be moving to revamp the Foreign Intelligence Surveillance Act, which among other things, creates a secret Federal court that empirically allows the Federal government to spy on American citizens in the United States—one of whom was a representative of citizens of Illinois whom they had elected to Congress—without a warrant.

[Congressman Austin, R-GA] Scott said lawmakers on the committee want to address who in government can query the database, who can be targeted and who must sign off on such warrantless surveillance. He also suggested there is some support for adding lawyers to the secretive process to help defend the rights of Americans who are being surveilled without their knowledge.

The problem with those first three…suggestions…is that there already are limits on who can query, who can be targeted, and who must sign off, and each of those limits have been routinely violated by FBI and intelligence personnel. There’s no reason to believe that new limits won’t similarly be blithely ignored.

The problem with that last is even larger: the secret process still would be secret, the lawyers supposedly defending the targeted Americans’ rights would be secret, they would be appointed by the same government that has been abusing FISA surveillance powers right along, and there would be no way for us American citizens to assess the skill with which those “defense” lawyers defend, or even their level of zeal.

It’s promising that there is finally a recognition that the FISA process is flawed in some way.

However, what’s truly required is to abolish altogether the Star Chamber that is the secret FISA Court. Scott made the case for abolishment—although he didn’t intend that—when he told JtN that there was clear evidence that the law’s past safeguards have been breached by the FBI and intel agencies. Given that, there’s no reason to believe those FBI and intel agency personnel won’t “breach” any new safeguards, also.

Yellen and Law

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The Wall Street Journal editors wrote Thursday about Treasury Secretary Janet Yellen’s…flip-flopping…on making whole, or not, nominally uninsured depositors in the wake of SVB’s failure and the government takeover of Signature Bank. Their subheadline accurately summarized the matter.

Are all deposits insured or not? Only [Yellen] seems to know.

The editors’ lede was this:

Treasury Secretary Janet Yellen on Thursday walked back her comments from the day before that walked back her remarks the day before about providing a de facto guarantee on all US bank deposits.

The editors then asked the question: Who’s on first?

An especially a propos followup came just a bit later in that routine: “Q: When you pay off…who gets the money? A: Every dollar of it.”

Legally, in answer to the subheadline question is no; only deposits of $250k or less are insured. But what’s a law to a Progressive-Democrat? Only a suggestion, to be ignored at convenience.