A visionary president once said:
“My resolve to reform the system is only strengthened when I see a return to old practices at some of the very firms fighting reform; and when I see record profits at some of the very firms claiming that they cannot lend more to small business, cannot keep credit card rates low, and cannot refund taxpayers for the bailout. It is exactly this kind of irresponsibility that makes clear reform is necessary”
So for those of you that don’t know Obama has been proposing bills that fight at the very heart of capitalism.
1) Tax on assets of 0.5% per annum on financial institutions whether or not they took government money or paid it back. Just an indiscriminate tax all financial businesses holding $50B in assets, despite if they dealt in MBS or other securitization procedures that the White House blames whole heartedly for this mess. Why not a mortgage broker tax too? They were the foot soldiers in this mess.
2) Reinstate draconian measures to limit the size and dealings of banks. So any bank holding government backed deposits cannot invest, transfer money or run a hedge fund or private equity company. Who does the government thinks funds innovation in this era? Way to not allow companies to integrate and leverage their size.
So his latest public address (attached below again)
“cannot lend more to small business, cannot keep credit card rates low, and cannot refund taxpayers for the bailout”
“cannot lend more to small business” – Isn’t it their choice who they lend funds to and what risks they take? If the businesses were solid, had good cash flow and were lucrative to lend to…. they would. However there are other oppurtunities right now presenting much better returns, and that is the function of efficient capital allocation.
“cannot keep credit card rates low” – Credit card defaults are rising… and they need to address that risk and build reserves. The concept seems easy to understand: we are losing money on this business, lets accurately price the risk. It almost seems like Obama wishs that these companies subsidize poor performing arms of their businesses with profits from the other arms.
“Cannot refund taxpayers for the bailout” – The companies who could, have repaid the tax payer as fast as they could to escape the often ridiculous scrutiny of this administration. The other companies who haven’t, clearly couldn’t pay it back and this was known ahead of time. AIG for instance. Let’s lend them hundreds of billions, make all the smart people quit and demonize the rest… and then realize that their is no hope of ever recovering the money. At this point they are going after the other healthy businesses. If this isn’t punishing success I don’t know what is a better example.
Capitalism has never been stronger.