President Obama gave a speech a couple of days ago in which he made fun of John Boehner, Minority Leader of the House, for comparing the financial regulation reform bill to using a nuclear bomb to kill an ant. Obama scoffed at the idea of calling the financial crisis an ant.
And he was right. The financial meltdown was a very serious situation that did a lot of temporary damage to the economy. Investors, both the big boys and the average citizens, lost billions in stock value and other assets. As companies failed, millions lost their jobs.
Where Obama is mistaken is in thinking that more government regulation will prevent such a meltdown from ever occurring again. This financial crisis, like almost every financial crisis, was brought about by a combination of greed, stupidity, and dishonesty. Lenders came up with insane mortgage products to help people buy houses that they could not afford. Financial professionals took these toxic loans and combined them with other investments and sold them to investors who should have asked more questions. Congress, particularly Barney Frank, kept denying there was any problem with Fannie Mae or Freddy Mac, quasi-government entities that turned these mortgages into securities. Neither Obama, Congress, nor any government body can legislate, regulate, or intimidate greed, stupidity, or dishonesty out of existence.
Ironically, Obama’s administration proves this. In a story the New York Times broke, it turns out that Administration officials have found a way around a rule that discloses how often they meet with lobbyists. There is a rule that states that when lobbyists go to the White House to speak with anybody in the Administration on behalf of whoever they represent, the lobbyists are required to sign in each and every time they go to the White House.
The purpose of the rule, obviously, is to have a public record on how many times Administration officials meet with lobbyists. That way reporters and investigators can find out how many times a lobbyist for an organization that got a sweet deal or a favor from the Administration met with someone in the White House.
Apparently, the Administration found a “coffeehouse exclusion” to the rule. Lobbyists told the New York Times that after they initially met with an official in his or her office at the White House, when they called again, they were told to meet the official at Starbucks or Caribou Coffee or some other convenient place to discuss the lobbyist’s business. That way, they avoided the lobbyist signing in at the White House and having a public record of how often they met. One more shining example of the Obama’s oft promised and heralded transparency.
I have a question. Do Obama and his administration really believe that they are so awesome that the new regulations will prevent dishonesty in the financial sector, and that financial professionals will no longer deceive clients and the public for monetary gain, in which case they don’t understand human beings? Or is the law a cynical charade, the Administration knowing that the financial sector will find a way to circumvent it, even as they circumvent the rule to prevent corruption in the White House by meeting lobbyists over a cup of joe?