Krauthammer on the Dodd financial regulation bill

From NRO:

I think what is so interesting about the bill that’s now proposed is that it is Congress once again voluntarily emasculating itself.

The bailout as proposed in the bill would allow the executive branch on its own — without any appropriation from Congress, any approval from the Congress – to . . . essentially seize a firm that it designates (again: unilaterally) as systematically risky, take it over, have the Treasury back all of the bad loans, and then have the Fed print the money to pay them off.

Now, when we did the Chrysler bailout, or the bailout of the TARP, which we had in 2008, you had to get the Congress [to go] along. This is an interesting and, I think, a disturbing trend where so much arbitrary power is not only in Washington, but only in the executive. There is no check, no balance.

That means you get a few powerful people in Washington — [the] secretary of the treasury, head of the FDIC. You walk into a large institution and you say we might designate you systematically risky. We want you to do "x," "y" and "z." I can assure you they‘re going to do "x," "y" and "z."

And that's the way it happens in Putin's Russia . . . It's not the way it should happen here. I think Congress ought to stay engaged, and how it's willingly giving up its balancing prerogatives is remarkable. . . .

There is a huge irony in this, pointed out by Larry Lindsey . . . He also did this analysis of the Treasury and the Fed unilaterally acting —and that is that the big institutions and the banks like this, because if you know that if you lend money to these large institutions, in the end the Treasury and the Fed will come in and guarantee all the loans. That means you will preferentially lend to these institutions and it’ll end up exactly like Freddie and Fannie. They’re going to be able to then borrow at lower rates and have a competitive advantage.

So ironically, it strengthens the fed[eral government] and it also favors the big, big institutions and hurts the smaller ones. . . . [As with] Freddie and Fannie, they have an implicit guarantee. . . .

It passes. Everybody hates Wall Street. Anything that’s against Wall Street will pass.