House Democrats passed a sweeping financial "reform" bill yesterday, without a single Republican vote and a number of Democratic votes, 223-202. This is yet another example of Democrats gold-plated regulation, where unintended consequences abound depending on how it's implemented. I've made it very clear in past posts that I believe that there is need for greater transparency in derivative transactions; the status quo invites systematic risk and a barriers-to-entry marketplace dominated by a few operators whom profit from imperfect information available to transaction participants. However, I do not want federal regulators, lacking necessary expertise and responsiveness to change in rapidly evolving industries, bottlenecking America's financial institutions from globally competing with new innovative products and services. You don't need to saddle other businesses with additional costs (feeding the bureaucracy), which essentially get passed down to businesses and consumers; you don't get more products and services to consumers hobbled by artificial price ranges and inefficient, inflexible, slow bureaucratic processes obtrusive in the relationship between financial institutions and their customers.
In a word: KISS: "Keep it simple, stupid!" Improve transparency; let industry clearinghouses take the lead; enforce reasonable margin/collateral requirements. The Democrats, similar to their approach under the so-called stimulus bill and health care reform, have produced a convoluted, incoherent plan that flatly contradicts the principles of the rule of law, introduces chaos, indecision, and unintended consequences into the marketplace, and uses the Trojan horse of legitimate necessary reforms to pack in a pent-up progressive wishlist of unnecessary and counterproductive provisions, pushing on a string.
A Progressive Judge Postpones ACORN's Day of Reckoning
Clinton appointee U.S. District Judge Nina Gershon late yesterday granted an injunction against Congress's decision to strip ACORN of federal funding (the Association of Community Organizations for Reform Now) in the aftermath of a well-publicized undercover exposure where employees advise a pimp on how to work the system (setting up an illegal business (a brothel), avoiding taxes, etc.) Let me first qualify my opinion by noting I am not making specific claims of wrongdoing by ACORN and its employees--but even the appearance of wrongdoing is sufficient to justify Congressional action.
Get out your handkerchiefs. ACORN lawyers are claiming the Congress stripping ACORN of federal funding is a bill of attainder, that the scandal in question was an isolated incident of rogue employees, whom were subsequently
Anyone with a rudimentary understanding of sampling and statistics understands the unlikelihood of an "isolated incident", which is politically convenient but doesn't survive an elementary application of Ockham's razor. If stings of ACORN were as plentiful as blackberries, I'm sure we would see the truth; it's unlikely that the pattern of ACORN hiring, management policies, standards and supervision were out of the ordinary in the Washington location (and even if it was, ACORN lacked the internal controls to detect it). But, fortunately, you don't have to depend on just the amateur pimp sting. ACORN showed a consistent pattern of alleged voter fraud in several states.
The judge has dubiously bought into the idea that the Congress does not have the right to make rules regarding disbursement of federal tax dollars. It's the Congress' fault for not making it clear that they shouldn't use tax dollars to subsidize criminal activity; they are making up the rules after the fact. It's so unfair.... Of all the unidentified organizations facilitating criminal activity, they are the only ones getting singled out. It's all a political conspiracy... The judge has bought into this nonsense because some Republican legislators have spoken of "punishing" ACORN. So what? The Republicans are out of power; they couldn't pass a bill without cooperation from the Democrats, the ACORN defunding bill had broad support (345-75, 85-11) And I'm perfectly willing to let the FBI investigate ACORN for any fraudulent use of tax dollars and for Attorney General Holder to prosecute ACORN if and when the evidence warrants (if he has any time to spare, preparing for the upcoming KSM show trial).
But the Congress, when presented with unexpected evidence of wrongdoing against the public interest, decides there are material grounds for questioning whether tax dollars are at risk, is doing the same type of function as public accountants, when they find evidence of transactions outside documented client guidelines or can't trace and vouch transaction workflow: they expand the scope of the audit and may qualify their opinion.
Earth to Judge Gershon: It is not unprecedented for Congress to make changes in the awarding of federal dollars. For example, my first Oracle DBA gig was with a small IT government contractor whom got a support contract with the regional EPA in Chicago, which had been taken away from a large IT shop.
The basic concept behind a bill of attainder is using the legislature as a workaround to the justice system, where traditional legal rights are not protected. ACORN has no legal right to taxpayer money, period. The Congress is not prohibiting ACORN from raising funds from progressive groups. There is no doubt if Congress had been aware of these kinds of abuses from the get-go, they would never have funded ACORN.
Hans von Spakovsky wrote an excellent post nearly 3 months ago debunking the frivolous arguments ACORN is desperately attempting to forward in trying to retain its contracts. I won't repeat the author's arguments in detail here, but he points out that even funding to long-term government contracts are subject to annual Congressional budget approval, there have been a number of cases where the government has set aside contracts, none of which have been successfully challenged in the courts on bill of attainder grounds since 1965, and the ACORN defenders are improperly generalizing an individual right to an organization. Since when does a government contractor have a right to future federal money, when the record shows there is significant risk of exposure of federal funds to illegal activity and a demonstrable lack of internal and management controls? Doesn't the Congress have an inherent obligation to send a message to existing and future contractors that it will not tolerate an abuse of the public trust? It's not punishment--it's regulation.
Political Cartoon
Dana Summers points out that not many poker players win by letting other players see the cards they are holding.
Christmas Musical Interlude: Dan Fogelberg's "Same Old Lang Syne"
This is the late Dan Fogelberg's signature ballad of a guy running into his former girlfriend on Christmas Eve; they catch up on what's happened over the years, including his professional success as a musician. But eventually she has to leave, painfully reminding him of when she broke up with him. The only problem is the fact that the song got overplayed on the radio in the early 1980's so much so that my female friends at UH Catholic Newman were starting to complain about it. Dan Fogelberg is one of my favorite recording artists (in addition to others like Paul McCartney, Elton John, Peter Cetera, Amy Grant, Bruce Springsteen and David Gates); it's almost impossible to find a single these singers have done I don't like.
