Tag Archives: regulation

Bank Bail-ins

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But this legacy [of bank financing of trade deals] is now under threat in Europe from new regulation aimed at preventing another bank bailout.

That’s right.  The EU has decided that tools banks use to finance trade agreements between other parties must be regulated by the Know Betters of the European Commission.

The new rules are designed to shield taxpayers from bailing out distressed financial institutions again[.]

“EU authorities” are, as usual, operating from a false premise.  There’s no need for a government entity to bail out, or to avoid bailing out, any bank.  Banks don’t need bailing out.  It’s all right if they fail.  It’s good, in fact, for bad banks (e.g., those otherwise thought to need bailing out) to fail; that’s how dead wood gets got rid of.

It’s really quite simple, for all that government experts have over-complexified the thing.  The way to not to bank bail-outs is to not bail them out.  Let the free market decide a bank’s (or any enterprise’s) fitness to continue operations, and if the market turns thumbs down, let the bank fail.  Full stop.

The Fed’s Rule by Fiat

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Federal Reserve officials strongly signaled they will be toughening big-bank capital requirements even further than they have since the 2008 crisis, a move that will further increase pressure on the largest US banks to consider shrinking.

Fed governors Daniel Tarullo and Jerome Powell, in separate public comments Thursday, said the Fed will require eight of the largest US banks to maintain even more capital to pass the central bank’s annual “stress tests.”

Notice that they’re acting by rule and moving sharply away from their knitting, which is to concern themselves with maintaining price stability and full employment.  With this rule, they’re nakedly broadening their interference in the free market place.

Here’s Tarullo:

“Effectively this will be a significant increase in capital,” Mr Tarullo said on Bloomberg television.  He recently said in an interview that he expected big banks to have to change their size, organization, or business model in response to the Fed’s regulatory moves.

Never mind that a business’ size, organization, or business model are solely the decision of the business’ owners—private citizen shareholders—and not the interest of any government in a truly free market economy.

Here’s Powell:

“I have not reached any conclusion that a particular bank needs to be broken up or anything like that,” he said.  The point is to “raise capital requirements to the point at which it becomes a question that banks have to ask themselves.”

This is disingenuous.  When it’s government rather than owners forcing the question onto a business, it’s government dictating the answer.  Especially when using this sort of tool for the forcing.  Capital requirements and associated risk handling are solely the decision of the business’ owners—private citizen shareholders—and not the interest of any government in a truly free market economy.  Assessment of the outcomes of those decisions are solely the province of the business’ owners, customers, and a free market; they are no concern of government.

Of course these two and their fellow Fed Governors know this.  The move, though, is consonant with the Left’s general move toward ever larger government with ever larger intrusions into private affairs, driven by their ideology that Government is the answer, and where it fails the proper corrective action is to increase Government.

A British Exit from the EU

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There’s an aspect of so what to the question: what would actually change if the Brits vote to go their own way in a few weeks?  One set of answers involves British influence on the continent or within the EU.

[I]f the British do vote for Brexit and then have to trade with the EU, the UK would in fact find itself isolated with very little influence over regulatory standards in the single market.

Great Britain already has very little influence over those regulatory standards: look, for instance, at the hue and cry from the rest of the EU over how the British comport themselves, and regulate others, in London’s financial markets.  Also, from outside, the British would be utterly free to set their own market regulatory standards without interference or “help” from their Continental betters.

It’s the same with welfare programs and immigration generally.  Although the British do fare quite a bit better here—as part of British Prime Minister David Cameron’s pre-British exit (Prexit?) negotiations with the EU, he won concessions (not enough, some would say) regarding the amount of British welfare payments would be paid to migrant (not immigrant) workers and their stay-at-home (country) families.  But the French already are up in arms over English impertinence at not letting immigrant/refugees to flow across the channel quickly enough to suit France.

Neither of those problems would be any worse with a British exit, and the British would be in absolute control over them were they to go their own way.

The upshot looks as though there is, indeed, a what to the so what—and it favors a British exit from the EU.  Which, in addition to giving Great Britain a great deal more flexibility and complete national sovereignty, would restore the British to their historical role of power broker among hegemon wannabes on the continent.

That last isn’t all bad for the British or for the continent.

What Hath Obamacare Wrought

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The Wall Street Journal provided an amazing graphic in its Wednesday edition.ObamacarePremiumIncreasesEven accounting for bad estimating by the health coverage plan companies, this is a clear illustration of the depth of President Barack Obama’s (D) lie when he said insurance costs would go down by roughly $2,500 per year.

It’s also going to get worse: a number of programs intended to buffer these providers against such increase needs expire in 2017, including “risk corridors,” which then will be funded solely by health coverage providers’ own wealth redistribution “premiums” paid into the program by profit-making providers for the sake of money-losing providers.

Voting Rights

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A federal judge on Tuesday ordered Ohio officials to reinstate a week of same-day registration and early voting before an election, finding a 2014 state law eliminating the practice violated the Constitution by depressing African-American voting.

Judge Michael Watson said this in his ruling:

They have greater time and resource limitations that may prevent them from waiting in line on Election Day and are less likely to vote absentee.

Never mind that there are no impediments to voting absentee.  Not economic, transportation, time, [or] child-care constraints that increase the cost of voting.

This is a bad ruling.  Not only has he misstated the impediments, he also has applied the wrong solution to his claimed wrong.  The second paragraph of the 14th Amendment prescribes the penalty to be applied to a State that has deprived some of its voting-eligible citizens of their right to vote.  Which, of course this judge knows, since he explicitly cited that paragraph in his ruling.

Judges like this are forcing an end to early voting altogether and requiring voting to go back exclusively to in-person on election day or by absentee ballot.

‘Course, that might not be a bad outcome in its own right.  Absentee ballot voting also is early voting.  And couch potatoes need go no farther than their mailbox to vote.

Watson’s ruling can be seen here.