Category Archives: regulation

A Thought on a Thought on Bank Reserves

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Neel Kashkari, President of the Federal Reserve Bank of Minneapolis and active member of the Federal Open Market Committee, had the thought that’s the object of my thought in a recent op-ed in The Wall Street Journal.

…increase capital requirements on the biggest banks—those with assets over $250 billion—to at least 23.5%. It would reduce the risk of a taxpayer bailout to less than 10% over the next century.

No.  Have the banks publish their reserve holdings and the total of the loans outstanding in their portfolio together with the per centages of the latter that are current, late, or in default.  Let each bank’s creditors—depositors and other lenders—and investors make their own assessments of the bank’s viability.  Government need not be involved.

Beyond that, we have a bankruptcy court system that’s entirely adequate to the problem; there’s no need to excuse banks from the system.  Moreover, by doing this much, we would eliminate the too-big-to-fail monstrosity of Dodd-Frank, and we would reduce the risk of a taxpayer bailout by far more than Kashkari’s timid 10%: that risk would be reduced by 100%.

Beyonder than that, we have this seeming conflict.  Bank of America CEO Brian Moynihan recently asked,

Do we have [to hold] an extra $20 billion in capital? Which doesn’t sound like a lot, but that’s $200 billion in loans we could make.

To which Kashkari quite legitimately replied,

Borrowing costs for homeowners and businesses are near record lows. If loans were scarce, borrowers would be competing for them, driving up costs. That isn’t happening.

However, leaving aside the regulatory state that’s holding back our economy and with that depressing demand for big ticket items and so demand for loans (and interfering with the process of loan making, as described by Kashkari in his piece), the loan rates/demands vs freeing up those loanable funds is a chicken and egg thing.

I vote for the egg: free up those restricted funds in the private sector instead of freeing up funds via the Federal printing press.

A Terrible Nightmare for Bureaucrats

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Here’s Joe Pizarchik, ex- Office of Surface Mining Reclamation and Enforcement Director in the Interior Department, for all of the Obama years:

My biggest disappointment is a majority in Congress ignored the will of the people.  They ignored the interests of the people in coal country, they ignored the law and they put corporate money ahead of all that.

Wow.  Just wow.  Because the people, exercising their will in electing the majority of Congress—all the members of Congress, come to that, every single one of them—had their will ignored when the majority that they elected executed on their will by rejecting a bad regulation.

Again, wow.  Just wow.  Because that Congress, in executing on the will of the people by acting within a previously enacted law and rescinding a regulation, ignored the law.

A third time, wow.  Just wow.  Because Congress, in acting on that Congress-passed law and rescinding a coal job-killing regulation, acted against the interests of the people in coal country, people whose livelihoods were threatened by that regulation.

Of course Pizarchik worked for seven years—seven years!—on his regulation, only to have Congress get rid of it.  That’s not fair!

Now he’s working on a replacement rule for submittal under a future President:

I believe there’s a good chance that, in a legal challenge, that a court will overturn Congress’ actions here as an unconstitutional usurpation of the executive branch’s powers[.]

Never mind that the Executive Branch’s rule-making authority is solely a delegation from Congress and that the Executive Branch is required to remain wholly within the scope of the law which its regulation is intended to implement.

Plainly, eighth-grade civics was not a safe space for Pizarchik.

And there’s this pit of worry: Ross Eisenbrey, Policy Director in OSHA from 1999 to 2001 asks

Why would an administration risk putting all the years of effort into a rulemaking, all the political capital to do it, knowing somebody could take the rule to district court and have it blocked in an instant because the judge says it’s similar enough?

Why, indeed?  It is to hope.

 

h/t Don Surber

Is the Department of Education Living on Borrowed Time?

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Probably not but Congressman Thomas Massie (R, KY) has introduced a bill in the House of Representatives to eliminate it.  It’s unlikely to pass, more’s the pity, but we can hope.  Massie’s bill is short and sweet, too, consisting of this in its entirety:

The Department of Education shall terminate on December 31, 2018.

I’d add a second sentence, though: “All employees and associates of the Department of Education shall be returned to the private sector and not reassigned elsewhere in the Federal government.”  I’d also add a third sentence: “All rules and letters promulgated by the Department of Education shall be null and void.”  The third one may be unnecessary from a strictly legal standpoint, but I think it’s necessary for absolute clarity.

The Wall Street Journal, in the op-ed at the link, had a slightly different view:

Our view would be to put Representative Massie’s close-down bill on hold for at least four years, while the rest of us give Mrs DeVos a chance at making good on reforms that put the students at the front of the line.

I disagree. As long as it exists, the DoEd will be a Progressive-Democrat threat to our children.  More, the Federal government has no place in our education system; eliminate its presence in altogether—no matter the good intentions of an incumbent Secretary.

There’s not even a need for a rump Department to issu[e] block grants to states based on population and performance of education systems at state level, as one commenter at the op-ed suggested.  There should be no Department, rump or full-up, and there should be no Federal money transfers at all. Aside from those block “grants” never appearing without Federal strings, there’s no reason a New York tax payer should be paying into Texas’ education system, or a Californian paying into Illinois’, or….

A Carbon Tax Proposal

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No less a pair of lights than George Shultz and James Baker III have one regarding atmospheric carbon emissions.  They’re prefacing their case on their then-boss, President Ronald Reagan’s successful negotiation of the Montreal Protocol to rein in the failures of atmospheric CFCs that were destroying the ozone layer.  Not that the two have anything to do with each other, but it makes for good obfuscation.

Shultz and Baker have four “pillars” to their proposal:

First, creating a gradually increasing carbon tax. Second, returning the tax proceeds to the American people in the form of dividends. Third, establishing border carbon adjustments that protect American competitiveness and encourage other countries to follow suit. And fourth, rolling back government regulations once such a system is in place.

Their first pillar echoes ex-President Barack Obama’s (D) promise to let electricity generators use all the coal they wanted; Obama’s policies just would put them out of business.  No carbon emissions. Period.  Never mind that there’s very little need to reduce carbon emissions.  Atmospheric CO2 used to generate acid rain, but that pollution is long since reduced to the point of elimination.  Beyond that, the EPA’s pseudo-science “finding” notwithstanding, atmospheric CO2 is plant food, not a pollutant.  We eliminate that plant food at risk.

Return the tax proceeds to us as dividends?  That’s just wealth redistribution by government fiat.  Haven’t we had enough of Progressive redistribution failure already?  Not to mention the cynically internally illogical mechanism for the redistribution.

A $40-per-ton carbon tax would provide a family of four with roughly $2,000 in carbon dividends in the first year, an amount that could grow over time as the carbon tax rate increased.

How could the dividend grow—isn’t the tax supposed to reduce emissions significantly?

Border carbon adjustments?  Pit importers against exporters again.  That’s the outcome of the existing border adjustment tax being proposed in the House today.

Roll back the regulations once “such a system is in place?”  Really?  Can Shultz or Baker name two programs that have been rolled back once they’ve been enacted?  They’re not that naïve.

This is just more Progressive foolishness, now being spouted by two fine gentlemen who’re past their age of usefulness.

A National Parental Leave Policy

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AEI has a piece on this; unfortunately, their piece proceeds from some false premises.

Developing a National Paid Parental Leave Policy

It’s interesting that folks of a bent proceed from such claims. They always decline to establish, for instance, that we need a national policy for parental leave. It’s such a widespread failure that I have to conclude it’s deliberately Alinsky-esque in its attempt to control the discussion.

The United States is one of two countries without a national policy providing new mothers with rights to paid leave following the birth of a child.

And then this non sequitur keeps getting dragged out as if it matters that we don’t look like the rest of the world. Never mind that, more substantively, we aren’t like the rest of the world, so there’s no reason we should look like the rest. There aren’t very many federated republics extant.

At present, we simply do not know what the ideal leave program for the US would look like.

Yes we do. It’s what each of the 50 States in our republic think one would look like–it’s what the citizens of each of those States think is best for themselves. Full stop.