That link does not provide very much information as far as what's being taken into consideration. I would like to see their estimated costs for Obamacare and Dodd-Frank before I give it any validity. It is difficult to quantify the fiscal damage that those two bills will introduce as they unfold over time. It sounds like to me that they are just tabulating OMB measurements.

 

Nevertheless, Obama and George W. Bush have been more or less similar presidents in terms of their fiscal policy. Obama is receiving more heat about the regulatory burden in the country because the current economic climate is radically different from what Bush was facing during most of his presidency. The present circumstances demand that we start repealing regulations rather than creating new ones.

 

Repealing Dodd-Frank in its entirety would be a great place to start. There is absolutely nothing beneficial about it. It completely ignores the root cause for the excessive risk taking on Wall Street, which was the "too low for too long" monetary policy. The bill more or less reinforces or even exacerbates the same problems that caused the crisis in the first place. Most notably, it essentially maintains the "too big too fail" doctrine.

 

 

Does the article only consider regulation in the sense of Federal government regulations (the CFRs) that have already been codified?

 

In that case, certain things like Obamacare would not be included as it doesn't really go into effect and start consuming funds until (was it 2014?).

My suspicion is that it doesn't include either one from the way the article was written. The article was just a brief summary of the findings and contains no insight into the methods.

 

The regulatory burden of both bills is likely not on the order of magnitude of a couple of billion (the crux of the study), but probably far greater than that. As stated, these studies cannot accurately take into account the lost productivity and lost innovation that results from the regulatory climate. There are certain products and ideas that could emerge in the marketplace but ultimately never do because of the weight of regulations that strangle their realization.

 

If Obama wants to "stimulate" the economy, he should be spearheading a massive deregulatory campaign. Regulations account for just short of $2 trillion in lost productivity every year through compliance costs.

 

But don't a lot of those "regulations" prevent abuse of our economy by those that just wrecked it 3 years ago ? If it costs a little bit more in regulation to prevent a depression than I am all for it.

That link does not provide very much information as far as what's being taken into consideration. I would like to see their estimated costs for Obamacare and Dodd-Frank before I give it any validity. It is difficult to quantify the fiscal damage that those two bills will introduce as they unfold over time. It sounds like to me that they are just tabulating OMB measurements.

 

Nevertheless, Obama and George W. Bush have been more or less similar presidents in terms of their fiscal policy. Obama is receiving more heat about the regulatory burden in the country because the current economic climate is radically different from what Bush was facing during most of his presidency. The present circumstances demand that we start repealing regulations rather than creating new ones.

 

Repealing Dodd-Frank in its entirety would be a great place to start. There is absolutely nothing beneficial about it. It completely ignores the root cause for the excessive risk taking on Wall Street, which was the "too low for too long" monetary policy. The bill more or less reinforces or even exacerbates the same problems that caused the crisis in the first place. Most notably, it essentially maintains the "too big too fail" doctrine.

 

 

Does the article only consider regulation in the sense of Federal government regulations (the CFRs) that have already been codified?

 

In that case, certain things like Obamacare would not be included as it doesn't really go into effect and start consuming funds until (was it 2014?).

My suspicion is that it doesn't include either one from the way the article was written. The article was just a brief summary of the findings and contains no insight into the methods.

 

The regulatory burden of both bills is likely not on the order of magnitude of a couple of billion (the crux of the study), but probably far greater than that. As stated, these studies cannot accurately take into account the lost productivity and lost innovation that results from the regulatory climate. There are certain products and ideas that could emerge in the marketplace but ultimately never do because of the weight of regulations that strangle their realization.

 

If Obama wants to "stimulate" the economy, he should be spearheading a massive deregulatory campaign. Regulations account for just short of $2 trillion in lost productivity every year through compliance costs.

 

You fail to mention the benefits of regulation. There are many. If you deregulated everything as you would probably want we'd have dirtier air, dirtier water, more dangerous medication, etc. Regulation per se isn't bad... it's ineffective and excessive regulation and in some cases the lack of regulation that is the problem.

That link does not provide very much information as far as what's being taken into consideration. I would like to see their estimated costs for Obamacare and Dodd-Frank before I give it any validity. It is difficult to quantify the fiscal damage that those two bills will introduce as they unfold over time. It sounds like to me that they are just tabulating OMB measurements.

 

Nevertheless, Obama and George W. Bush have been more or less similar presidents in terms of their fiscal policy. Obama is receiving more heat about the regulatory burden in the country because the current economic climate is radically different from what Bush was facing during most of his presidency. The present circumstances demand that we start repealing regulations rather than creating new ones.

 

Repealing Dodd-Frank in its entirety would be a great place to start. There is absolutely nothing beneficial about it. It completely ignores the root cause for the excessive risk taking on Wall Street, which was the "too low for too long" monetary policy. The bill more or less reinforces or even exacerbates the same problems that caused the crisis in the first place. Most notably, it essentially maintains the "too big too fail" doctrine.

 

 

Does the article only consider regulation in the sense of Federal government regulations (the CFRs) that have already been codified?

 

In that case, certain things like Obamacare would not be included as it doesn't really go into effect and start consuming funds until (was it 2014?).

My suspicion is that it doesn't include either one from the way the article was written. The article was just a brief summary of the findings and contains no insight into the methods.

 

The regulatory burden of both bills is likely not on the order of magnitude of a couple of billion (the crux of the study), but probably far greater than that. As stated, these studies cannot accurately take into account the lost productivity and lost innovation that results from the regulatory climate. There are certain products and ideas that could emerge in the marketplace but ultimately never do because of the weight of regulations that strangle their realization.

 

If Obama wants to "stimulate" the economy, he should be spearheading a massive deregulatory campaign. Regulations account for just short of $2 trillion in lost productivity every year through compliance costs.

 

But don't a lot of those "regulations" prevent abuse of our economy by those that just wrecked it 3 years ago ? If it costs a little bit more in regulation to prevent a depression than I am all for it.

No, not at all. In fact, many of those existing regulations helped create the recession.

 

This is something I've talked about at great length in the past, but generally speaking the housing bubble was not created because of a lack of regulations or loose regulations. It was almost entirely the result of bad monetary policy and lending standards enacted by the US Federal Reserve system that promoted excess speculation that never would have happened under free market conditions.

 

Not entirely true. One of the causes of the recession was the "originate and sell" model whereby the originators of mortgages had zero skin in the game after they'd bundled together into bonds. The Dodd-Frank law requires originators to keep a 5% interest in the bonds they sell - this will make them much more careful about what kinds of mortgages they sell. This will reduce risk. This is a universally accepted positive of Dodd-Frank - all investors I've spoken with are in favor of this particular provision. There are other good provisions in this bill, too.

We need regulation in the form of enforcement of fiduciary duties. Translation: Goldman Sachs can't bundle their worst mortgages, tell clients to invest in them, and then bet against those clients. Such regulation may or may not require new laws - a lot of white collar crimes are exceedingly difficult to prove, although whether there should be criminal liability (and of what variety) is a whole other question - but situations like that simply can not go unpunished. It's bad for consumer confidence and just plain wrong.

What regulations are you referring to, then? I mentioned regulations pertaining to air and water as examples, but there are many others, including ones having to do with workplace safety and the safety of medicines and food. Not sure what regulations you are specifically referring to if not ones related to the environment, food, and drugs.

 

In addition, it wasn't just the GSE's that were the problem. The originate and sell model applied to private entities as well. I think a problem with your argument is that it is way too broad and isn't nuanced enough.

Under the new rules, Countrywide would have been required to keep skin in the game. Essentially, the Countrywides of this country sold off those mortgages to the GSE's and then were hands off. Making sure they keep some skin in the game makes them more responsible. I agree that the GSE's need to be reformed.

(assuming they aren't regulating things like carbon emissions and greenhouse gases).

 

Why make exceptions for this?

Excuse me for hopping into this mid-conversation, but are you suggesting that global warming is not real or that the regulation of carbon emissions does nothing?

Excuse me for hopping into this mid-conversation, but are you suggesting that global warming is not real or that the regulation of carbon emissions does nothing?

 

Yes. Both are correct.

 

You see... I wouldn't know sh*t about the latter part of my post (whether or not it's something to be scared of or if it's something that we can actually fix).

 

However behind all of the politics and the choosing sides, despite the fact that warming patterns have occurred naturally, most unbiased science does in fact point to global warming as caused by human beings as a very real thing.

Oh no... I'm not getting into it. I'm just stating fact.

 

Obviously such a discussion is simply un-backable in terms of the internet. Every single source cited will suffer from some form of bias. Your only real answer to this is from scientific journals. The science community as a whole has no reason to lie.

Under the new rules, Countrywide would have been required to keep skin in the game. Essentially, the Countrywides of this country sold off those mortgages to the GSE's and then were hands off. Making sure they keep some skin in the game makes them more responsible. I agree that the GSE's need to be reformed.

 

I've addressed this pretty thoroughly in my last couple of posts.

 

Whether or not Countrywide still has "skin in the game" is not a matter of concern. The problem begins and ends with the GSEs who are essentially enabling the risky lending. Forcing Countrywide to have "skin in the game" is essentially punishing the less guilty party while letting the major root of the problem (the GSEs) get off scott free. If the GSE's were dealt with responsibly, rather than protected by Frank and Dodd who had close ties to Fannie and Freddie, it would not matter if Countrywide was "hands off" with those loans because they never would have been issued in the first place.

 

Despite what Frank and Dodd want you to believe, the GSEs are the monster here.

 

Not true. Countrywide originates the loans/mortgages and then bundles them up and sells them. If they maintain some interest in those bundled up loans/mortgages, it is MUCH more likely to be careful when it gives people those mortgages to begin with. Before Dodd-Frank, Countrywide could originate sh*tty mortgages and then sell them off without keeping any kind of skin in the game. This led to lower lending standards and poor supervision of lending practices. Now that they will share in both gains and losses they will be more careful.

 

I am saying this from the perspective of a finance professional. I've had this conversation with people that are actually involved in investing real money. This rule will have a real impact.

Countrywide is not the less guilty party. They're originating sh*tty mortgages to begin with. Don't know how you can't understand that.

I agree that the GSE's played a role. Not disputing that. But this other aspect also played a role. Not sure how you don't think it influences behavior. It's easy to see, IMO. If you can originate bad mortgages and sell them off without worrying about whether or not there will be significant defaults, why would you care about the quality of the mortgages you're originating? You become less careful in the short term. Making sure they maintain some stake in these mortgages will make them more careful.

 

And if the GSE's were such a huge issue, why weren't the issues you noted so prevalent before 2001? I don't recall there being such a large real estate crisis before then, yet the GSE's were operating in much the same way. In fact, many of the things that people point to as being the culprits (such as the CRA) have been around for decades.

 

Anyway, we're not going to agree simply because you can't accept the fact that there could be at least one regulation that could make the free market work more cleanly. You're too ideological and it is pointless to discuss anything with you.

And there's my point. I fully expected a response like that and there's nothing to be achieved here but a lose-lose/stalemate.

Wow. He actually appears to have first made that speech in 2002:

http://paul.house.gov/index.php?option=com_content&task=view&id=323&Itemid=60

The government through its GSE proxies told lenders that there was no need to be responsible, that they can originate total crap and they will be 100% covered, they will just get the benefits and none of the consequences. It is not any different than handing over a no-limit credit card to a teenager and telling them to do whatever they want - they are likely to run it up stupidly and it is YOUR fault, not theirs.

 

What's worse, is there are regulations in place requiring lenders to originate mortgages for reasons other than creditworthiness: geographic, demographic and social reasons that have nothing to do with ability to pay. Failure to do so leads to civil and criminal penalties as well as a ban on lending.

 

Originators certainly wrote crap loans, but only because it was consequence free and even the "skin in the game" provision doesn't change that - because 5% is just a number to manipulate before you foist the turds off on the taxpayer. Remove the artificial underwriting and the bad loans stop happening. Some people just need to remain renters.

 

Right now the Fed is offering 0% loans to banks in hopes they will make this money available to the public, but all that has done is drive the cost of fuel and food higher (despite market forces that should lower the price of both) because the currency is weaker. These banks are merely borrowing the money at 0% and buying T-Bills that yeild interest. This is not the banks fault, it is the government's fault. The bankers are just doing what they should do in that instance, because they have a responsibility to the bank and its shareholders.