As I have said in the past…millionaires policing millionaires……

The plan outlined by Obama calls for enhanced powers for the Federal Reserve to oversee big financial firms, both bank and non-bank companies; higher capital reserve and liquidity requirements; minimal government oversight of some hedge funds; a privately-run clearinghouse for some forms of derivative trading; and a requirement that lenders retain a small stake in loans they sell to the banks to be turned into securities.

All of these requirements can be easily circumvented by the banks. Moreover, the political forces responsible for enforcing them are bound hand and foot to Wall Street.

The panoply of existing federal regulatory agencies is for the most part to remain in place. Obama made much of the creation of a new body, the Consumer Financial Protection Agency, which he said would protect consumers against predatory practices by mortgage lenders and credit card companies. However, this agency will have no new powers beyond those previously spread out among other agencies.

The centerpiece of the plan is a proposal to allow the Fed and the Federal Deposit Insurance Corporation to seize and wind down big banks and non-bank financial firms whose failure would pose a “systemic threat.” This is considered necessary precisely because none of the other proposals challenge the ability of banks, hedge funds, insurance companies and other financial firms to engage in speculative practices that are certain, at some future point, to threaten another financial collapse. It amounts to the institutionalization of taxpayer bailouts of the financial system, in place of the ad hoc methods employed in the present crisis.

The comparison of Obama’s plan to the regulatory reforms of the 1930s is specious. In the depths of the Depression, Roosevelt imposed significant structural reforms to rein in the banks and save American capitalism from the threat of social revolution. A cornerstone of these reforms was the Glass-Steagall Act of 1933, which erected a barrier between commercial banks and investment banks.

Glass-Steagall was repealed in 1999, during the Clinton administration. That was a milestone in the deregulation of the banks. It was part of a process, stretching back to the early 1980s, in which the US ruling elite has turned increasingly to financial manipulation to generate profit and personal wealth, while dismantling huge sections of industry and waging relentless war against the jobs and wages of the working class.

The result has been a colossal growth of social inequality and the emergence of a financial oligarchy that dominates the political life of the country. Both parties are at the beck and call of Wall Street, and are incapable of enacting any measures to rein in its plundering of the social wealth.

Obama and the Democratic-controlled Congress have ruled out a return to Glass-Steagall. They have rejected capping executive pay. Nor is there any suggestion of closing down the casino for credit default swaps, collateralized debt obligations, structured investment vehicles and other exotic forms of speculation that played a major role in the financial crash.

I have been saying the same thing for months and it is good to see that I am not a lone voice out there calling a turd a turd.

Also, let me see if I have this right……a former head of the NY fed has given more and sweeping power to the Federal Reserve?  Is that about right?  The Fed is far from a rational organization and to give them more power than they have now may be a disasterous move.  Everyone in the media is so concerned with the raising deficits, but few are focusing on what is being done behind the scene and that a repeat of the crap we are now in is not that far fetched.