Caught: White House Political Collusion in SEC Investigation. White House Wants Unlimited Bailout and Siezure Power. Can anyone be trusted with that much power? UPDATE – All the president’s Goldman Sachs men

[Editor’s Note – This is a bit of a complex story. Please read the following story carefully. After you are done go HERE for a story update.]

The SEC (Securities Exchange Commission) is supposed to be an independent agency. This may be the scandal that brings an administration down. When the GOP takes Congress back they will have subpeona power and the investigations are going to fly.

Barack Obama took nearly a million dollars from Goldman Sachs and four million from Wall Street.

Barack Obama worked to prevent mortgage reform and to prevent reform of Fannie Mae and Freddie Mac.

Barack Obama took the second highest amount of money from the mortgage giants in the Senate.

Now Barack Obama is making political hay out of an SEC investigation of Goldman Sachs (of which, believe it or not they might actually be innocent in this one case).

There is evidence that the White House knew about the coming SEC investigation in advance. The timing for Obama’s new financial regulation bill seemed just a little too sweet. The White House (who insists that it didn’t know about this in advance) bought the advertising for the Google search term “Goldman Sachs SEC”. The SEC in a highly unusual party line move decided to sue Goldman Sachs just now at the beginning of Obama’s push for this legislation.

Financial News:

The Securities and Exchange Commission decided to sue Goldman Sachs Group over the objections of two Republican commissioners, suggesting an unusual split at the agency that could politicise one of its most prominent cases in years.

The legislation gives the White House near unlimited bailout power (unlimited Wall Street bailouts) and the ability to sieze any private business without any check and balance. That is the kind of power you see in Stalinistic regimes, not the United States. The legislation also has no provisions to reform the two biggest players in the mortgage scandal, Fannie Mae and Freddie Mac, who funded almost $200 million to partisan activities, and whose multimillion dollar bonuses were protected by Democrat legislation.

[Editor’s Note – Ok who wants to say that this is not the biggest power grab and opportunity for corruption of our lifetimes? Does anyone know a mainstream Democrat or Republican voter who would trust any man with this kind of power? But do not be fooled, this “lawsuit” is for public release only (PR purposes). It will either go away or Goldman Sachs will get a slap on the wrist and gladly pay, as Goldman has made a fortune since the economic collapse and the Obama Administration continues to be a revolving door for Goldman employees, lobbyists and influence peddling.]

Rush Limbaugh played some of the evidence the media has discovered so far. In spite of what you think of Limbaugh he is very factual here in what he presents and it is worth watching (Hat Tip Rightscoop for the video):

Charlie Rose to Rahm Emanuel: How is it that the New York Times knew about the SEC Investigation Before Goldman Sachs did….

By the way I did a Google on “Goldman Sachs SEC” and sure enough….

There it is on the very top, “Help Change Wall Street” and it goes to this:

.. amazing…

Real Clear Politics: Limbaugh: White House Had Advanced Knowledge Of SEC Suit Against Goldman Sachs

In the mean time even MSNBC criticized Democratic Senate Leader Harry Reid for dodging questions on Goldman Sachs/Wall Street fund raisers hosted by the president of Goldman Sachs. Video:

Charles Krauthammer discussing the Obama Administration’s “Financial Reform Bill.” He said it would provide “no check, no balance” for Executive power: 

Brad Sherman Congressman (D-Calif.), member of House Financial Services Committee (Via Politico):

But there are serious problems with the Dodd bill. The Dodd bill has unlimited executive bailout authority. That’s something Wall Street desperately wants but doesn’t dare ask for. The bill contains permanent, unlimited bailout authority.

House Republicans put out this statement about this power grab:

Washington, Apr 19 –

With a new national survey showing that nearly eight in 10 Americans say they don’t trust the federal government, Washington Democrats are getting ready to force through Congress a permanent bailout bill that establishes an unelected council of federal regulators with the power to seize any U.S. business and do with it as they see fit.

The permanent bailout bill authored by Senate Banking Chairman Chris Dodd (D-CT) creates a Financial Stability Oversight Council (FSOC) made up of federal regulators – including representatives from the Treasury Department, the Federal Reserve, the CFTC, FDIC, and the SEC.  In other words: the government bureaucracies asleep at the switch the last time around.

This clique of regulators could – by a 2/3 vote – deem any firm (financial or non-financial) “systemically significant,” which is merely jargon for other jargon: “too big to fail.”  At that point, according to economist Larry Lindsey, the Council would “authorize the FDIC and Treasury Secretary to treat each of the firm’s shareholders and creditors as they choose, without regard to bankruptcy law.”  Any institution could be ordered to “break itself up, stop selling certain products, or even go out of business,” according to the Heritage Foundation.

INSTITUTIONALIZING “TOO BIG TO FAIL,” HURTING SMALL BANKS.  Senior Atlantic editor Clive Crook sees the council of regulators as a major factor in how Washington Democrats’ permanent bailout bill institutionalizes “too big to fail”:

Sen. Dodd’s bill “adds new bodies … a Financial Stability Oversight Council to coordinate the policing of systemic risks.  Overall, after much shuffling of duties among this expanded list of regulators, the plan makes the system more complicated, not less. … Under the Dodd plan, although the senator denies it, many big financial firms would indeed be declared too big to fail. The market would put banks that meet the assets threshold for Fed supervision into this category.  Other financial firms would be viewed the same way if the Financial Stability Oversight Council designates them as ‘systemically significant.’” (National Journal, 3/20/10)

Once these firms are deemed ‘systemically significant,’ they will be seen as safer firms to lend to than small firms that are not government-backed.  The result will be a permanent market distortion, favoring large companies over small ones.  This will hurt small businesses and smaller banks at the worst possible time for our economy.

ENDLESS BAILOUTS FOR WALL STREET. In a speech last month, SEC Commissioner Troy Paredes outlined how Washington Democrats’ financial bailout bill would grant this council of regulators “unbounded power” to intervene in U.S. businesses:

“…[E]ach of the proposals I took time to reference would, in my view, result in just this sort of open-endedness.  For example, by allowing the new regulator to consider so many factors in deciding whether a firm is systemically significant, the bills in Congress go far to empower the regulator.  The council of regulators could readily find some basis, among the host of factors it is permitted to consider, to justify designating a financial firm for heighted prudential oversight.

“Equally uncertain are the extent and character of the more restrictive standards that may be imposed to bind the size or activities of a systemically-significant firm; there are no clear limits on the degree of government intervention that could be expected. … I do not welcome the prospect of such unbounded power, even if exercised with the best of intentions.  It would inject too much uncertainty into the system and aggregate government authority to a worrisome degree.”PROTECTING BANKERS, NOT TAXPAYERS.  Carnegie Mellon economist Allan Meltzer sees the new bureaucracy as “just another way to pick the public’s purse” given how regulators are historically inclined to protect bankers, not taxpayers:

“So setting up an agency to prevent systemic risk, as Mr. Dodd has just proposed, is just another way to pick the public’s purse.  Systemic risk will forever remain in the eye of the beholder.  Instead of shifting losses onto those that caused them, systemic risk regulation will continue to transfer cost to the taxpayers.  The regulators protect the bankers.  They continue to lose sight of their responsibility to protect the public.” (The Wall Street Journal, 3/19/10)

POLITICS.  Manhattan Institute fellow Nicole Gelinas examines how the council of regulators would inevitably “fall victim to politics”:

“In a bubble, more people are over-exuberant than not. The new Financial Stability Oversight Council would not escape this fact.  It would also fall victim to politics. Imagine that the Fed and other agencies had restricted all but the plainest-vanilla mortgages back in 2000…. The regulators would have tempered the bubble–but the politicians wouldn’t have seen it that way. Instead, they’d have accused bureaucrats of roping off citizens from the American dream. … We need politicians and regulators to implement simple rules that don’t require faith in omniscient, micro-managerial government planning.” (Forbes.com, 3/29/10)

In his Cooper Union speech in March 2008, then-Sen. Barack Obama said, “Reshuffling bureaucracies should not be an end in itself.”  Instead of protecting taxpayers by crafting reforms that are regulator-proof, Washington Democrats have devised a system that is regulator-reliant.  Republicans believe we should stop endless bailouts for Wall Street and reform Fannie Mae and Freddie Mac, the government mortgage companies that sparked the meltdown by giving high-risk loans to people who couldn’t afford it. For more information on the House Republican plan, click here.

UPDATE – Malkin: All the president’s Goldman Sachs men – LINK