SUMMARY: Tom Vendittelli, candidate for Congress in New York’s 13th Congressional district, rips apart the recently-passed financial reform bill.
This week the U.S. House of Representatives passed a financial “reform” bill. Unfortunately, the bill will do nothing to avoid a future financial collapse, because it does not address the core problems of our economic system.
The legislation that has passed the House this week is only distracting and, ultimately, further destructive to our already fragile economy. If we want to be serious about financial reform in this country, we need to concern ourselves with the Federal Reserve. As long as we have a bank that operates outside the oversight of the people’s representatives in Congress, and which acts as a lender of last resort for banks and politicians, we can expect more of the same.
The Federal Reserve Bank acting as a lender of last resort is what creates the moral hazard that makes excessive risk seem so appealing. When there is a Federal Reserve that will create credit out of thin air for a “too big to fail” bank, there is no real risk of failure. The only real risk is the public anger that arises when average Americans realize they have been swindled by politically-connected organizations in collusion with their supposed “representatives” in Congress.
Artificially low interest rates set by the Fed under Alan Greenspan caused massive over-investment in housing and other sectors of our economy, which resulted in a bust that really signaled the end of an economic era. Under the new financial reform bill, the Fed will be further empowered, with even greater oversight and influence over the economy than they already possessed.
Considering the Fed was in no small part responsible for the bad investment and excessive risk that led to the collapse of our economy in 2008, why are they now being given even greater powers? This is akin to having the fox guard the hen house. To make matters worse, in an act of brazen mass hypocrisy, 114 Congressmen who had previously cosponsored legislation to audit the Federal Reserve (H.R. 1207), voted to strip the audit out of the financial reform package at the last minute. So much for oversight.
If we want true financial reform, for the sake of our freedom and liberty, we need to examine the Federal Reserve in depth and find out what they are doing behind closed doors. This week the United Nations announced that they should dump the dollar as a world reserve currency because it has been “unable to safeguard value.” A move like this would have direct negative consequences on the value of our currency. This is yet another signal that the Fed has failed, with disastrous results not only to the economy at large, but to our personal finances as well.
The Federal Reserve, at best, didn’t see the collapse coming; at worst, they are in collusion with some of the most powerful money interests in the world. Neither is a situation that warrants giving them greater influence over the economy.
This huge mistake of a bill is now moving onto the Senate. If anything, this has been instructive, as it shows us exactly whom the politicians in Washington work for. Rather than grant greater powers to the Federal Reserve, it is time to declare the 100-year experiment in American central banking to be a dismal failure, and return to the sound money of our Constitution. The future of freedom and prosperity demands it.
[The author, Tom Vendittelli, is a candidate for Congress in New York’s 13th district. This is the first of a three part series on financial reform.]