By Simon Johnson
The House “JOBS” bill is a thinly disguised repeal of investor protection in the United States. This legislation would help unscrupulous people in the securities industry but it would be bad for nonfinancial businesses – by raising the risks to investors, it would push up the cost of capital for honest entrepreneurs. Investment professionals belonging to the CFA Institute have expressed their serious concerns and strong opposition. Attempts to amend this legislation – and to make it more sensible – failed in the Senate yesterday.
The Senate will vote today on whether to adopt the main provisions of the House bill. Passing this bill would be a major public policy mistake – akin to the disastrous (and bipartisan) deregulation of the financial sector in the 1990s. This kind of excessive deregulation leads to disaster – and to fiscal crisis. (For more background and the historical comparison, see this piece.)
President Obama claims he wants strong investor protection. Where is he on the specifics of the JOBS bill? Why is the White House staying so much on the sidelines during this critical Senate process? The president should rally Democratic Senators against the House bill and press again for an amended and more responsible piece of legislation.
If the Republicans refuse to agree to sensible investor protections – flying in the face of American tradition and established best practice (and lessons learned the hard way in the Great Depression) – that is a great issue for the general election in November.
The Baseline Scenario 
Obama is stayIng on the sidelines because he doesn’t want to alienate potential deep-pocket donors. Why does the American eagle fly in circles? Because it has two corporate parties–I.e., no left wing.
i wrote in opposition to it 5 days ago, but i dont think it would resonate with the electorate one way or the other…
After looking at that resume, i’m certain it won’t matter.
The referenced piece states: “We must re-evaluate the distorted political economy of the financial sector, before the excessive power of the few imposes even larger costs on everyone else”
Absolutely! It is time we hold the regulators accountable for what they did… and do
Require the banks to hold only 1.6 percent of equity, implying a 62.5 to 1 authorized leverage, when they invest in triple-A rated securities, like those guaranteed with lousily awarded mortgages to the subprime sector, and
Require the banks to hold only 1.6 percent of equity, implying a 62.5 to 1 authorized leverage, when the lent to an “infallible” sovereign like Greece.
Nothing new nor surprising from a bribed Congress. Obamacare is worried about his reelection so he can write about his place in history thus, wanting that pseudo jobs bill signed a.s.s.a.p.
Simon, do you seriously believe that the President is opposed to this legislation, or even in favor of protecting consumers when it comes to a choice between them and the Wall Street elite. Sorry, but that is blind faith. Barrack Obama not only hired Tiny Tim and Larry (the financial stooge) Summers, but reappointed Ben (the oligarchic bumbler) Bernanke, and, if that doesn’t signal a strong alliance with Wall Street power, what does? After all, this is a guy who has Jamie Dimon on speed dial and talks with him about almost everything financial. The President has been accused by the GOP of being anti-business, but there is no empirical proof of this, actually quite the contrary. When it comes to this bill, which is a pure travesty of financial charletanism, we simply can’t tolerate another descent into fiscal hell. This bill is a tragic mistake. This is why the Wall Street elite spend hundred of millions on elections, and why there are ten lobbyists for every member of Congress. It works. Think of what is likely to happen if Mitt Romney wins the Presidency. This bill will pale when considered against his spoken and unrevealed plans for this country.
The socalled government can massage – I mean manipulate – I mean disort the jobs numbers to their coldhardhearts content. The grim reality is that there are no jobs. There is slavelabor at slavewages, but no real jobs!!!
Middleclass wage earners are stuck in 70’s era compensation. We are losing ground every hour. The gop wants to make us slaves. The dems are cowards and hurling us along the same terrible path. No one will help us! There is no balm in Gilead. Burn it ALL down – reset!!!
I could agree on several resets… but a “Burn it ALL down” While you are the richest and most powerful country in the world? You’ve got to be kidding!
The GOP was up to their dirty tricks in Seattle Washington as the Santorum, Gingrich, and Romney people tried to team to prevent any delegates from going to Ron Paul. But there was a little problem… they were massively outnumbered by Ron Paul supporters who just weren’t having.
Instead, they staged a coup and took the chair from few establishment GOP puppets on site who responded to the mutiny by walking off with the ballots and the scanners as an attempt to steal the delegates from Ron Paul.
It didn’t matter because the crowd of highly motivated Ron Paul Supporters took over the caucus and figured things out just fine without using the fancy scanners.
Then the establishment sock puppets tried putting motions through to kick out Ron Paul’s chair after voting ended, presumably so they can take the ballots and pull some shenanigans behind close doors.
As a writer on the Daily Paul reports, the motions were responded to with “a resounding spartan-like “NAY!” Thanks to their efforts Ron Paul walked away with the entire slate of 21 Delegates.
It truly is a sad time in America that voters need to form massive crowds to and literally take over the election halls just to have a fair vote.
My hat goes off to the Ron Paul team for their dedications and persistence despite the corporate media blackout and the lies they face in their battle against the establishment’s propaganda machine.
The bill is an unmitigated disaster for investors as it passed the House. The jobs it will create will be in boiler-room call centers that market fraudulent investments. Eventually it will also create jobs for securities defense lawyers once all the financial fraud by public companies that the bill enabled comes to light. The potential cost to investors will be huge. The bill is little more than deregulation disguised as a jobs bill.
@TonyF and Per – heck, it’s *war*, right?
So all options are on the table…and *burning down the house* does make sense in certain situations. As a quip on a comedy show noted, “…we used to blow up villages just so we could re-build them…”, and, also, in past great epics of war – the army ALWAYS blew up their technology and weapons rather than let the enemy get their hands on them…so for peoples who are CAPABLE of rebuilding, and always IMPROVING during the re-build, btw, it IS a valid option – better off burning it down than letting savage thieves move in…I’m just sayin’….LABOR HAS THE RIGHT TO THE FRUITS OF ITS LABOR.
Point taken Per Kawowski. But for clarification – I’m referring to the government. A government that is owned and controlled by select oligarchs advancing select oligarch interests – and a government that is working systemically to diminish and undermine the people’s former rights, freedoms, and best interests.
Amerika is in decline because our socalled leaders in the socalled government is a government of the predatorclass, by the prefatorclass, and for the prefatorclass. Open for suggestions – but I don’t see any hope of righting these horrible wrong until we “…alter and abolish..,” the government.
@TonyF – yes we certainly do need to abolish the GLOBAL predatorclass that hijacked *government* – it’s impossible to actually get rid of *government* as that is inherent in the species – we will always *govern* ourselves, at least :-))
Take a page from the predators book – stick some probes into their various orifices to see whether *jesus* or *god* or the great spirit in the sky, wha’ever, is really in their hearts – their MERCILESS GLOBAL thieving lying and murdering sure doesn’t show any evidence of HUMAN *life* in the heart and mind…
Yeah, I’m getting more radical – they won’t stop STEALING to PAY FOR WARS…