Posted by Matt Hawes on 06/17/09 6:20 PM Last updated 06/20/09 1:45 PM   [Newer: Re: Ron Paul Interviews] [Older: Government Choosing an Iron Fist Over the Invisible Hand]

Earlier today, President Obama unveiled his regulatory reform plan, which deals with the economic crisis by creating more rules, regulations, and government agencies to spend money we don't have to implement them.  The Federal Reserve, currently taking hits from all sides, receives a substantial increase in powers.

According to The Wall Street Journal's summary of the 85 page plan (which can be read in its entirety here), the proposal includes the following:

--Creates Financial Services Oversight Council, which would coordinate activities among regulators, replacing the President's Working Group.

--Ensures that any financial firm big enough to pose a risk to the financial system would be heavily regulated by the Federal Reserve, including regular stress tests.

--Gives the Fed oversight over parent companies and all subsidiaries, including unregulated units and those based overseas....

--Gives the Fed more power over the infrastructure that governs these markets, such as payment and settlement systems....

--Creates a mechanism that allows the government to take over and unwind large, failing financial institutions.

--Creates a formal process for deciding when to invoke this power, which could be initiated by the Treasury, Fed, FDIC or SEC.

--Gives authority to make the final decision to the Treasury, with the backing of other regulators.

Read the entire summary.

With over half of the House of Representatives supporting a thorough audit of the Federal Reserve, recorded testimony from the Fed's Inspector General showing she has no idea how money is being spent there, and our "independent" central bank under so much fire that it has to hire a lobbyist to defend itself on Capitol Hill, we should expect the administration (factoring in its talk of transparency and accountability) to take the Fed to task, right?

Politics trumps logic again.

Again, according to WSJ:

The proposal, if passed into law, would represent one of the biggest changes ever in the Fed's role. The central bank would win power to monitor risks across the financial system, and sweeping authority to examine any firm that could threaten financial stability, even if the Fed wouldn't normally supervise the institution. The nation's biggest and most interconnected firms would be subject to heightened oversight by the central bank....

Read the rest (which also has an HR 1207 mention) here.

In yet another WSJ article, we find that:

The Fed emerges from the plan with the power to oversee from top to bottom almost any financial company in the country, including the firms' foreign affiliates....

So any financial firm, even if it doesn't actually own an insured depository institution, would be subject to regulation by the Federal Reserve. And this is supposed to be "checked" with what will in all likelihood become a rubber stamp from the Treasury.

Despite all the promises of change that were so easy to make during the primary season, the Obama administration is practicing business as usual.  Like previous administrations, its ideas involve centralizing power among a few under the guise of "streamlining" the process. Instead of achieving accountability, this plan will further empower those who led us to this point.

It all goes to show that our work to audit the Fed is only beginning.  While the support we have so far achieved is historic, we are taking on more than just our nation's central bank.  We are challenging a long-held, firmly entrenched mindset that begins and ends any conversation by asking how the federal government can increase its power.

Pressure from the White House to accept this plan will be intense.  Even if your representative has already cosponsored HR 1207, contact him again and urge him to stand consistently for true accountability and transparency by opposing the administration's plan.

Posted 06/17/09 5:53 PM mattgeb84 lynn, MA

well looks like Obama will veto the hell out of H.R. 1207

Posted 06/17/09 5:58 PM Erik Gumbrecht Tooele, UT

I was actually one of the few people who, in the beginning, thought Obama was a man with good intentions but severely misguided ideals. Now, I feel he is a man with ill intentions and severely misguided ideals. How can he give more power to the very source that is destroying our economy and the value of our dollar? How can he preach transparancy and allow a power independently control everything without oversight without any checks and balances. How can he do all of this in the midst of an investigation of a serious crime by Ben Bernanke? Obama is a loser. Join the ranks with Mr. Bush and Benedict Arnold, sell-out.

Posted 06/17/09 6:03 PM Erik Gumbrecht Tooele, UT

If he does veto 1207 (which he will), it will just guarantee he will lose his next election. What's really sad is how much damage he can do so quickly. This guy is like a one man SWAT team...in...does the job...out...and on to the next one. He's going to have the "do-nothings" of this country feeding off of his hands and voting for him to keep their socialized benefits. We just have to be sure we have the majority on our side and get this guy out next election.

Posted 06/17/09 6:57 PM jamminjake Silver Spring, MD

Hi Everyone, Okay, my first post here... But this is very serious. C4L is working very hard to see this bill through and NOW it is currently obvious that Obama vetoes it. Ughh! How about an organized barage of emails to Obama White House? Is there a good way that we can start communicating truth-to-power about this? I will do it. Let's discuss here a way to send a strong message to Obama before the bill gets to his desk. Peace, Jake

Posted 06/17/09 6:58 PM mattgeb84 lynn, MA

im telling you Obama is nothing but a slick talking Bush

Posted 06/17/09 7:43 PM jamminjake Silver Spring, MD

I'm pissed now, but I think that the only way to make influence at this point is to communicate respectfully. Here's the White House Contact Info: http://www.whitehouse.gov/contact/ Leaders at C4L, could you advocate here a week-long call in/email campaign to comunicate our strong concerns to the White House about the Fed's performance and historic effects on America's economy? I would call and write every day. Dang, I'll do it anyway, but I think we could coordinate something a little stronger together. Let me know. Thanks, Jake

Posted 06/17/09 8:18 PM BrentFox Baton Rouge, LA

This is the obama administration to HR1207 - not a rational debate but a complete obfuscation of the true issue into a worse deal for us. The only thing they could do politically to reverse the anti-fed momentum./

Posted 06/17/09 8:21 PM Joey Batz Brooklyn, NY

Am I the only one who thinks that if the Federal Reserve gets audited fully, the findings will be as shocking and far-reaching as that of the findings of the CIA's operations in 1975?

Posted 06/17/09 8:40 PM smashysmashy dover, NH

I agree Erik. If Obama veto's 1207, it brings the bill to the headlines. There is just no way in hell that the people will be behind obama on that. There is absolutely no argument against 1207 that the general populace will buy, ESPECIALLY from an administration who preaches transparency like the gospels. He absolutely will not survive a 1207 veto. That being said, they will do everything they possibly can to stop the bill from getting a vote. I don't know how much longer they can push it aside with the recent success. I am very interested to see how many cosponsors jump on board after today's announcement about increasing the fed's powers. And I am actually incredibly scared right now because this was an incredibly defiant move by obama in the face of recent 1207 success. Their is something huge up their sleeves.

Posted 06/17/09 9:02 PM austriantheory1 Monroe, NY

Not to be a killjoy (or killrage), but I'm pretty sure that this is actually a backdoor maneuver in our favor. Remember, of enemy isn't "The Federal Reserve," it's fractional reserve banking, institutionalized by the Federal Reserve. The rest of this reform plan talks about requiring cash reserves to be raised and we should be encouraging Obama on this. Sure, he's giving authority to the Federal Reserve, but it's to "compel corrective action" if they don't comply with having reserve standards met. We consider fractional reserve banking to be fraud, and it looks like we're getting police to me. Furthermore, HR 1207 is to audit the Federal Reserve, not abolish the Federal Reserve. There is still MUCH hope left. Once we expose them for the corrupt inflationists that they are, and show what they've done to our money, there's no way they could proceed without someone policing THEM. So as long as we're policing the Federal Reserve frequently to stop the weasel-esque behavior, we've reduced the Fed to fractional reserve banking (fraud) police. In Conclusion: I think this plan was a good idea, ESPECIALLY if we get HR 1207 done.

Posted 06/17/09 11:05 PM KD Texas Houston, TX

We need to keep vigilant on HR1207, and full force start hammering our senators about S604! We need both to succeed. Start writing, calling, faxing and keep up the pressure.

Posted 06/17/09 11:20 PM Joey Batz Brooklyn, NY

Brentroos--"There is no more important legislation right now than H.R. 1207 and S.604." I know that S. 604 is the Federal Reserve Sunshine Act or something (what a name), and of course I know about H.R. 1207. Since Ron Paul doesn't have much of a hand in S. 604 (not being a Senator), is there any major differences between it and H.R. 1207? Also, how is it faring? I'm a little rusty on my congressional procedures (it's been about two years since my Legislative Powers course in school), but I think BOTH bills have to be successful for anything to be presented to President Obama, not just H.R. 1207. Right? Hopefully it has a decent number of cosponsors. Perhaps after we're all done calling our representatives, we can call our senators and have them support S. 604?

Posted 06/17/09 11:36 PM Taika Bardstown, KY

S604 is a word for word copy of HR1207. It's the Senate version. Somehow the bill names got mixed up. Though we still need to get HR1207 to 290+ sponsors, we do need to start working on S604. Currently there are 3 sponsors for that, Senators Sanders, Demint, and Vitter. The pressure should start NOW. :)

Posted 06/18/09 12:25 AM Erik Gumbrecht Tooele, UT

austrian theory 1- I understand what you are saying, but regardless of what Obama says it is...or intends it to be... the end result is the Fed calling the shots on the other financial institutions. I think it is completely unsafe to entrust them to do this function, and...as Ron Paul says in most instances, carries "unintended consequences." Further, the only way it could work is to have the Fed's responsibilities limited, completely transparent, and unquestionably controlled by congress...which I don't think we will get based on how often we have seen Mr. Obama make decisions on his own. This guy is going to cause us A LOT of damage before the end of his term.

Posted 06/18/09 12:33 AM Erik Gumbrecht Tooele, UT

austrian theory 1- I understand what you are saying, but regardless of what Obama says it is...or intends it to be... the end result is the Fed calling the shots on the other financial institutions. I think it is completely unsafe to entrust them to do this function, and...as Ron Paul says in most instances, carries "unintended consequences." Further, the only way it could work is to have the Fed's responsibilities limited, completely transparent, and unquestionably controlled by congress...which I don't think we will get based on how often we have seen Mr. Obama make decisions on his own. This guy is going to cause us A LOT of damage before the end of his term.

Posted 06/18/09 07:16 AM loumiller21 Little Egg Harbor Twp, NJ

This president is outrageous! As many of you have said a veto of HR 1207 will severely damage his public image. So I think he would more likely just issue a signing statement to the bill gutting it of any substance - i.e. something along the lines of narrowing the scope of the audit and/or delaying it until after his first term. While those of us who understand this would complain, the media would portray complaints as "sour grapes" and convince the masses that compromise makes good policy. Ugh, this Regulatory Reform plan has me feeling sick.

Posted 06/18/09 08:02 AM Justin DeWind Grand Rapids, MI

In 1908 there were a slew of bank runs as a result of fractional reserve banking. The fall out was the creation of a federal reserve [central] bank. This was all under the guise of safety and protection of course. The situation we are facing to day is no less different.

Posted 06/18/09 11:08 AM AuthenticAuthor Canutillo, TX

Very well said Justin. Indeed, it's History repeating itself due to public ignorance and wishful thinking. Everyone in this country should know how evil this plan is on its face. But if they don't, with most still clinging to the "necessary evil" arguments of before, then my faith in humanity will be severely shaken. Fortunately, it seems as if the public is finally getting it after all these years. HR 1207 is up to 230+ cosponsors, which must mean something. Even if it's vetoed by Obama, we will at least have another clear view of the government's true colors. It will be more ammunition for the cause of Liberty. There's just simply no rational reason for bills like HR1207 to be vetoed, or denied a vote altogether. None whatsoever. Should it reach Obama's desk, I hope the rest of the world is watching.

Posted 06/18/09 12:48 PM BrendonDeMeo North Chelmsford, MA

This is by far the worst case scenario - pre-emptively the Obama administration makes the fed MORE POWERFUL while sending the signal that he would veto HR 1207. Obama is a sham, a cruel hoax of a president, swaying the masses into a false sense of security with the help of the media and fascist partnerships such as Pepsi (look at the Pepsi logo - btw, in Boston there is a giant sign that says "Together" with the Pepsi logo as the O, and the whole sign is in Obama campaign colors). Obama is a puppet of the Fed, and his campaign was largely financed by banksters. I can't go around claiming Obama is just misguided anymore, he has it in for us. He's a massive liar - the troops aren't coming home, we aren't getting out of NAFTA, we're not changing our foreign policy outside of tone, and there will be less transparency. He's worse than Bush. His administration is claiming people like us are right wing extremists while his cronies at CBS want us arrested and imprisoned because Von Brunn, who is against everything we believe, murdered someone in Germany. The tyranny we thought we'd never see in our country is coming, and the American people are mostly sufficiently brainwashed enough to accept it and usher it in.

Posted 06/18/09 12:59 PM freedom fighters louisville, CO

Guys, even obama veto it. The congress can over-write it. President does not have more power then the congress at all. Go study more.

Posted 06/18/09 1:36 PM AuthenticAuthor Canutillo, TX

Freedom Fighters: True. We'll have to wait and see won't we.

Posted 06/18/09 2:53 PM Liberty for Life Lake Forest, CA

Does BO know? BO's plan to transform the Federal Reserve into a super-regulator? The Federal Reserve best suited to keep an eye on firms deemed so big and influential? The same one that shrinked our dollar to 5 pennies? Yupe, the Shoddy Geithner is out selling BO's snake oil, to give the Fed more authority? BO wants to create more agencies; A council of federal regulators, chaired by the treasury secretary. A consumer protection agency. To create more Agencies and more government oversight? Is this the "changes" he was talking about? "I do not believe that we can reasonably expect the Fed or any other agency to effectively play so many roles." - Sen. Richard Shelby. These regulators oversight should be eliminated!!! BO doesn’t know how to solve the economic crisis. The market does! Americans don't believe it is the role of the president to run the market economy. What happened when BO handled the so called stimulus packages? The bank and insurance bailouts? The auto industry? The market disapproved! BO's lofty job approval slipped down. No one body has a bullet-proved solution. The market does! BO is to rely heavily on the Federal Reserve over financial institutions? A private, unconstitutional banking cartels, doesn't have to answer Congress or the American People. This debate and discussion just more of the distractions! Contact your representatives and tell them these central banks created these crises and they’re not the solutions! DON’T BUY BO's proposal! Liberate the market, liberty me. Peace…

Posted 06/18/09 5:47 PM BruceKoerber Cedar Rapids, IA

Money and Ethics Thursday, June 18, 2009 Obama says "Just Give More Power To The Counterfeiters!" When a counterfeiter acquires more power it means two things: 1). corruption has expanded, and 2). there will be more extortion. Can those who are giving the counterfeiter more power do anything but lie and scheme to give the appearance of being neutral? Can the booty from all of the avenues of extortion be traced back to the ones who are behind this scheme of economic terrorism? The Federal Reserve is the counterfeiting operation funding the economic terrorism of the unConstitutional coup. All those involved in this scheme are criminals. You are their victim! They will not stop unless you do something about it!

Posted 06/18/09 6:06 PM C00kieM0nster Oxnard, CA

Further proof that Monopoly only exists where gubmint lends it's hand.

Posted 06/18/09 6:20 PM brocksamson Edmond, OK

austriantheory1: "We consider fractional reserve banking to be fraud, and it looks like we're getting police to me. " Typically, I don't like the biggest criminal in an industry to be the regulator of that industry. It sounds more like organized crime than responsible government.

Posted 06/18/09 6:22 PM brocksamson Edmond, OK

austriantheory1: "We consider fractional reserve banking to be fraud, and it looks like we're getting police to me. " Typically, I don't like the biggest criminal in an industry to be the regulator of that industry. It sounds more like organized crime than responsible government.

Posted 06/19/09 01:18 AM Erik Gumbrecht Tooele, UT

Obama is knowingly putting wolves in charge of flocks from which they have already eaten.