New Financial Regulation Passes, Gives Fed More Power


After fending off most challenges to its independence and winning new powers to oversee big financial firms, the Federal Reserve has emerged from a bruising debate on the overhaul of U.S. financial rules as perhaps the pre-eminent regulator in the sector. But that could only bring it added blame if things go wrong again.

With financial reform clearing Congress, the Fed has emerged as perhaps the pre-eminent financial regulator, but that could only bring it added blame if things go wrong again. Jon Hilsenrath, Evan Newmark and Kelly Evans discuss. Also, Jennifer Valentino-DeVries discusses Apple’s options ahead of its anticipated press conference on the troubled iPhone-4.

Just a few months ago, amid populist anger at the Fed for failing to prevent the financial crisis of 2008 and bailing out Wall Street, Congress was talking of stripping the central bank of its supervisory oversight of banks or forcing it to submit to congressional audit of its interest-rate decisions.

Instead, the new law gives the Fed more power and a better tool box to help prevent financial crises. It will become the primary regulator for large, complex financial firms of all kinds, such as American International Group, the insurer which built a massive derivatives portfolio that regulators didn’t see until it was too late.



The 50 most unbelievable facts about the U.S. economy

Tyler Durden's picture

Submitted by Tyler Durden on 07/09/2010 17:02 -0500 |

As we close on another week replete with ugly economic data and the usual bizarro counterintuitive market, here is a summary of the 50 most underreported facts about the state of the US economy, courtesy of the Coto report. After reading these it almost makes sense that the market has become completely desensitized to the sad reality now pervasive in this country. Readers are encouraged to add their own observations to this list. Surely if the list is doubled, the market will go up to 72,000 instead of just 36,000.

#50) In 2010 the U.S. government is projected to issue almost as much new debt as the rest of the governments of the world combined.

#49) It is being projected that the U.S. government will have a budget deficit of approximately 1.6 trillion dollars in 2010.

#48) If you went out and spent one dollar every single second, it would take you more than 31,000 years to spend a trillion dollars.

#47) In fact, if you spent one million dollars every single day since the birth of Christ, you still would not have spent one trillion dollars by now.

#46) Total U.S. government debt is now up to 90 percent of gross domestic product.

#45) Total credit market debt in the United States, including government, corporate and personal debt, has reached 360 percent of GDP.

#44) U.S. corporate income tax receipts were down 55% (to $138 billion) for the year ending September 30th, 2009.

#43) There are now 8 counties in the state of California that have unemployment rates of over 20 percent.

#42) In the area around Sacramento, California there is one closed business for every six that are still open.

#41) In February, there were 5.5 unemployed Americans for every job opening.

#40) According to a Pew Research Center study, approximately 37% of all Americans between the ages of 18 and 29 have either been unemployed or underemployed at some point during the recession.

#39) More than 40% of those employed in the United States are now working in low-wage service jobs.

#38) According to one new survey, 24% of American workers say that they have postponed their planned retirement age in the past year.

#37) Over 1.4 million Americans filed for personal bankruptcy in 2009, which represented a 32 percent increase over 2008.  Not only that, more Americans filed for bankruptcy in March 2010 than during any month since U.S. bankruptcy law was tightened in October 2005.

#36) Mortgage purchase applications in the United States are down nearly 40 percent from a month ago to their lowest level since April of 1997.

#35) RealtyTrac has announced that foreclosure filings in the U.S. established an all time record for the second consecutive year in 2009.

#34) According to RealtyTrac, foreclosure filings were reported on 367,056 properties in March 2010, an increase of nearly 19 percent from February, an increase of nearly 8 percent from March 2009 and the highest monthly total since RealtyTrac began issuing its report in January 2005.

#33) In Pinellas and Pasco counties, which include St. Petersburg, Florida and the suburbs to the north, there are 34,000 open foreclosure cases.  Ten years ago, there were only about 4,000.

#32) In California’s Central Valley, 1 out of every 16 homes is in some phase of foreclosure.

#31) The Mortgage Bankers Association recently announced that more than 10 percent of all U.S. homeowners with a mortgage had missed at least one payment during the January to March time period.  That was a record high and up from 9.1 percent a year ago.

#30) U.S. banks repossessed nearly 258,000 homes nationwide in the first quarter of 2010, a 35 percent jump from the first quarter of 2009.

#29) For the first time in U.S. history, banks own a greater share of residential housing net worth in the United States than all individual Americans put together.

#28) More than 24% of all homes with mortgages in the United States were underwater as of the end of 2009.

#27) U.S. commercial property values are down approximately 40 percent since 2007 and currently 18 percent of all office space in the United States is sitting vacant.

#26) Defaults on apartment building mortgages held by U.S. banks climbed to a record 4.6 percent in the first quarter of 2010.  That was almost twice the level of a year earlier.

#25) In 2009, U.S. banks posted their sharpest decline in private lending since 1942.

#24) New York state has delayed paying bills totalling $2.5 billion as a short-term way of staying solvent but officials are warning that its cash crunch could soon get even worse.

#23) To make up for a projected 2010 budget shortfall of $280 million, Detroit issued $250 million of 20-year municipal notes in March. The bond issuance followed on the heels of a warning from Detroit officials that if its financial state didn’t improve, it could be forced to declare bankruptcy.

#22) The National League of Cities says that municipal governments will probably come up between $56 billion and $83 billion short between now and 2012.

#21) Half a dozen cash-poor U.S. states have announced that they are delaying their tax refund checks.

#20) Two university professors recently calculated that the combined unfunded pension liability for all 50 U.S. states is 3.2 trillion dollars.

#19) According to, 32 U.S. states have already run out of funds to make unemployment benefit payments and so the federal government has been supplying these states with funds so that they can make their  payments to the unemployed.

#18) This most recession has erased 8 million private sector jobs in the United States.

#17) Paychecks from private business shrank to their smallest share of personal income in U.S. history during the first quarter of 2010.

#16) U.S. government-provided benefits (including Social Security, unemployment insurance, food stamps and other programs) rose to a record high during the first three months of 2010.

#15) 39.68 million Americans are now on food stamps, which represents a new all-time record.  But things look like they are going to get even worse.  The U.S. Department of Agriculture is forecasting that enrollment in the food stamp program will exceed 43 million Americans in 2011.

#14) Phoenix, Arizona features an astounding annual car theft rate of 57,000 vehicles and has become the new “Car Theft Capital of the World”.

#13) U.S. law enforcement authorities claim that there are now over 1 million members of criminal gangs inside the country. These 1 million gang members are responsible for up to 80% of the crimes committed in the United States each year.

#12) The U.S. health care system was already facing a shortage of approximately 150,000 doctors in the next decade or so, but thanks to the health care “reform” bill passed by Congress, that number could swell by several hundred thousand more.

#11) According to an analysis by the Congressional Joint Committee on Taxation the health care “reform” bill will generate $409.2 billion in additional taxes on the American people by 2019.

#10) The Dow Jones Industrial Average just experienced the worst May it has seen since 1940.

#9) In 1950, the ratio of the average executive’s paycheck to the average worker’s paycheck was about 30 to 1.  Since the year 2000, that ratio has exploded to between 300 to 500 to one.

#8) Approximately 40% of all retail spending currently comes from the 20% of American households that have the highest incomes.

#7) According to economists Thomas Piketty and Emmanuel Saez, two-thirds of income increases in the U.S. between 2002 and 2007 went to the wealthiest 1% of all Americans.

#6) The bottom 40 percent of income earners in the United States now collectively own less than 1 percent of the nation’s wealth.

#5) If you only make the minimum payment each and every time, a $6,000 credit card bill can end up costing you over $30,000 (depending on the interest rate).

#4) According to a new report based on U.S. Census Bureau data, only 26 percent of American teens between the ages of 16 and 19 had jobs in late 2009 which represents a record low since statistics began to be kept back in 1948.

#3) According to a National Foundation for Credit Counseling survey, only 58% of those in “Generation Y” pay their monthly bills on time.

#2) During the first quarter of 2010, the total number of loans that are at least three months past due in the United States increased for the 16th consecutive quarter.

#1) According to the Tax Foundation’s Microsimulation Model, to erase the 2010 U.S. budget deficit, the U.S. Congress would have to multiply each tax rate by 2.4.  Thus, the 10 percent rate would be 24 percent, the 15 percent rate would be 36 percent, and the 35 percent rate would have to be 85 percent.

BIS gold swap – best news to hit gold in 30 years

As the reported BIS gold swap transaction effectively represents back door remonetisation of gold, it is extremely positive for the yellow metals future path.

Author: Julian D.W. Phillips
Posted:  Friday , 09 Jul 2010


In its 2010 annual report, the Bank of International Settlements said that “gold, which the bank held in connection with gold swap operations, under which the bank exchanges currencies for physical gold,” stands at 8,160.1 million in special drawing rights, equivalent to 346 tonnes this year, up from nil in 2009.”   Apparently this amount has now climbed to 382 tonnes since the report was issued.

Swaps – What are they and who does them?

Swaps are financial instruments that allow for the exchange of one asset for another, in this case, gold for currency.   They are not gold leasing, futures or options [which the 1999 and 2004 Central Bank Gold Agreement states would not be increased – The 2009 did not contain the statement].   Swaps could be undertaken by the signatories of the CBGA.  as these were not included in any of the three Agreements.

Gold swaps are usually undertaken between central banks: One central bank exchanges foreign exchange deposits (or other reserve assets) for gold with an agreement that the transaction be unwound at an agreed future date, at an agreed price.

The monetary authority acquiring the foreign exchange will pay interest on the foreign exchange received, the rate of which is currently very low.   Gold swaps are usually undertaken when the cash-taking central bank may want foreign exchange but does not wish to sell outright its gold holdings.

The Wall Street Journal informs us that the B.I.S. did these swaps with commercial banks.   We know of no commercial bank that has 382 tonnes of gold on their books.   It is likely then that should these commercial banks have been in the deal, they would have been acting for a central bank [or several over time] who wished to remain anonymous.

The B.I.S. received the gold into its safekeeping for the nation that required the foreign exchange for the swap period.   Swaps of this nature are renewable once the time runs out, so it is impossible to say how long the swap will last for.   The central bank that undertook the swap would have to be certain that it could return the currencies to get the gold back at some point in the future.   If that country defaulted, then and only then could the B.I.S. go ahead and sell this gold.   Any sale in the open market would be trumpeted loudly to all as well as reported in the Press or by the World Gold Council, B.I.S. or I.M.F.

Why use gold and not currency?

The financial crisis has led to a decline in the number of credit-worthy counterparties and a reduction in credit lines these counterparties can offer.   This is significant in a world where credit risk and debt problems have been the subject of banker’s fears since the appearance of the Greek debt crisis.   For someone in the trouble Greece is, gold swaps allow a central bank’s reserves to be lent in a credit-secure fashion.    In other words, a gold swap allows the lender of currency to benefit from greatly reduced credit risk, as the gold can be held in an allocated account, usually at the Bank of England.    The currency deposit is secured with gold throughout the life of the deposit.

Any country such as Ireland, Portugal, Spain, Italy, the U.K. and the U.S.A. can follow this route.   Yes, sales may not be permitted for fiscal reasons under Eurosystem rules, but these are not sales, but swaps.   So, of the utmost importance is just who swapped this gold?   Could it be one of the countries we just mentioned?   If so, their situation is far graver than previously thought.   The implication is that the collateral they offered just wasn’t good enough, so they had to use their gold.   This is major news for the monetary system.

The Significance of the Transaction[s]

What is significant about this or these transactions is that gold is being used in international settlements after so many decades of being sidelined in the monetary system!   The transaction itself confirms that gold is being used in this manner, which is a dynamic confirmation of gold’s return to the monetary system.   A “Swap” might be the first desperate step in such a transaction with the swapping bank hoping to repay the foreign exchange, but should it fail, the B.I.S . would have to decide either to keep the gold on its books or to sell it.   Again, keeping it on its books is part confirmation that gold is active again on the monetary system, a big boost by itself!

Gold is back and alive in the monetary system!

What appears to have really happened is that one nation or more needed foreign exchange to counter some shortfall in its accounts and raised these funds as a short-term liquidity measure, believing that it would be able to return the currency and receive its gold back.   The gold would then be returned at the conclusion of the swap period in return for the currencies swapped.   If it fails to return these funds to the BIS, then the BIS could discreetly place the gold with another central bank, should it not want to keep the gold.   If it did so, the BIS would simply report its disposal of the gold, the originating central bank would report the drop in its gold reserves and the gold buying bank would report its increase in the reserves.

This puts the transaction into an entirely different category.   It seems that one or more of the developed world’s central bank’s credit is not good enough for other governmental institutions.   If word got out as to which this country is, then the financial markets would go into quite a spin, shaking the global financial system to its core.   No wonder the B.I.S. is keeping such a low profile!

Julian Phillips is a long-term analyst of the gold and silver markets and is the principal contributor to Global Watch – Gold Forecaster –

U.S. marks 3rd-largest, single-day debt increase

The National Debt Clock is shown Monday, Feb. 1, 2010 in New York.  President Barack Obama sent Congress a $3.83 trillion budget on Monday  that would pour more money into the fight against high unemployment,  boost taxes on the wealthy and freeze spending for a wide swath of  government programs. The deficit for this year would surge to a  record-breaking $1.56 trillion. The Debt Clock is a privately funded  estimate of the national debt. (AP Photo/Mark Lennihan)

The National Debt Clock is shown Monday, Feb. 1, 2010 in New York. President Barack Obama sent Congress a $3.83 trillion budget on Monday that would pour more money into the fight against high unemployment, boost taxes on the wealthy and freeze spending for a wide swath of government programs. The deficit for this year would surge to a record-breaking $1.56 trillion. The Debt Clock is a privately funded estimate of the national debt. (AP Photo/Mark Lennihan)

By Stephen Dinan | 8:36 p.m., Wednesday, July 7, 2010

The nation’s debt leapt $166 billion in a single day last week, the third-largest increase in U.S. history, and it comes at a time when Congress is balking over higher spending and debt has become a key policy battleground.

The one-day increase for June 30 totaled $165,931,038,264.30 – bigger than the entire annual deficit for fiscal year 2007 and larger than the $140 billion in savings the new health care bill will produce over its first 10 years. The figure works out to nearly $1,500 for every U.S. household, or more than 10 times the median daily household income.

Daily debt calculations jump and fall, and big shifts are common. But all three of the biggest one-day debt increases have occurred under the tenure of President Obama, and all of the top six have been in the past two years – an indication of just how quickly the pace of deficit spending has risen under Mr. Obama and President George W. Bush.

“What matters is the overall trend line, and the overall trend line is shooting up,” said Robert Bixby, executive director of the Concord Coalition, a bipartisan deficit watchdog group, who said it is one more reason for a fiscal wake-up call.

Fears over red ink have stalled key parts of Mr. Obama’s agenda in Congress in recent weeks, including his push for another round of stimulus spending. Just last week, House Democrats had to use a tricky parliamentary tactic to pass an emergency war-spending bill, aid for teachers and new spending caps.

On Wednesday, the Congressional Budget Office said the government has recorded a $1 trillion deficit for the first nine months of fiscal 2010, which began Oct. 1. That’s slightly down from 2009’s record $1.1 trillion deficit at this point.

CBO said revenues are doing slightly better this year than last year, while spending is down about $73 billion, mainly because the government made giant payments last year to bail out Wall Street, but did not have similar expenses this year. Other spending is higher, including unemployment benefits, which have jumped nearly 50 percent.

Deficits are the difference between what the government raises in revenue versus what it spends each year, while debt is the accumulation of those deficits over many years.

The Treasury Department calculates the country’s debt position each day, and big rises and falls are not unusual. In fact, since hitting $13.203 trillion on June 30, the figure has since slipped $25 billion to settle at $13.178 trillion as of Tuesday, the latest day for which figures are available.

June 30 is always a major day for new debt, since debt held by one part of the government to another – for example, IOUs to the Social Security trust fund – are rolled over, a spokeswoman for the Bureau of the Public Debt said.

All told, this June 30, the government reported issuing $760 billion in new debts and redeeming $594 billion, for a new net debt of $166 billion that day.

White House officials said that big a jump is not the norm and that Mr. Obama has worked with the hand he was dealt by Mr. Bush. He has had to push spending to try to jump-start the economy and create jobs, even as he has also pledged to work in the long term to reduce annual deficits and bring the debt under control.

The budget he submitted to Congress earlier this year calls for a mix of tax increases and spending reductions, including a freeze on non-security discretionary spending, that would reduce deficits by $1 trillion over the next decade.

Mr. Obama has also named a bipartisan commission to recommend major changes that could help reduce the deficit to about 3 percent of gross domestic product, and stabilize the debt held by the public – a somewhat different figure than total debt – at about 60 percent of GDP, which the administration argues are more sustainable levels.

Testifying to that commission last week, CBO Director Douglas W. Elmendorf said to reach the sustainable debt goal the government will have to raise taxes by 25 percent, cut spending by 20 percent or do some combination of the two.

“That would require, for example, roughly a one-half increase in personal income tax revenue. On the other hand, if the change came entirely from spending … that would represent, for example, the near elimination of all government programs except for Social Security, Medicare, Medicaid and national defense,” he said.

The White House said CBO’s scenario doesn’t take into account some of Mr. Obama’s proposals, such as long-term cuts in spending resulting from the new health care law.

Still, Mr. Bixby, the deficit watchdog, said the size of the numbers CBO laid out to the commission shows the tough choices that await Congress. He said the solution will have to be a combination of revenue increases and changes to major programs such as Social Security and Medicare, which are growing at a faster rate than the economy as a whole.

Total public debt includes two pots of money. One is normal government debt in the form of Treasury bills and bonds held by consumers, while the other is intragovernmental holdings, or money one part of the government borrows from another agency. That includes money borrowed from the Social Security trust funds.

Some analysts say the key measure is not the total public debt, but the debt in the hands of consumers. That figure stood at $8.628 trillion on Tuesday.

© Copyright 2010 The Washington Times, LLC.

Ben Bernanke Has Created Half of All the US Dollars in Existence – in Four Years!

“The U.S. turned 234 years old yesterday, and yet over half of the nation’s money supply was created since Helicopter Ben took over the flight controls four years ago.  No wonder gold is in a full fledged bull market . . .”

-David A. Rosenberg  Chief Economist & Strategist
Gluskin Sheff + Associates Inc.

Federal Reserve Surprise! “We may have to print more money” to spur “recovery”

(Jerry’s Comments: Here it is. The Fed is now threatening to pull out the big guns. Among the strategies on the table, to offer “exceptionally low” for an “extended period,” and a major new asset-purchase program. I have bolded important statements in the story below.)

Federal Reserve weighs steps to offset slowdown in economic recovery

Washington Post Staff Writer
Thursday, July 8, 2010

Federal Reserve officials, increasingly concerned over signs the economic recovery is faltering, are considering new steps to bolster growth.

With Congress tied in political knots over whether to take further action to boost the economy, Fed leaders are weighing modest steps that could offer more support for economic activity at a time when their target for short-term interest rates is already near zero. They are still resistant to calls to pull out their big guns — massive infusions of cash, such as those undertaken during the depths of the financial crisis — but would reconsider if conditions worsen.

Top Fed officials still say that the economic recovery is likely to continue into next year and that the policy moves being discussed are not imminent. But weak economic reports, the debt crisis in Europe and faltering financial markets have led them to conclude that the risks of the recovery losing steam have increased. After months of focusing on how to exit from extreme efforts to support the economy, they are looking at tools that might strengthen growth.

“If the economic situation changes, policy should react,” James Bullard, president of the Federal Reserve Bank of St. Louis, said in an interview Wednesday. “You shouldn’t sit on your hands. . . . I think there’s plenty more we could do if we had to.”

One pro-growth strategy would be to strengthen language in Fed policy statements that the central bank’s interest rate target is likely to remain “exceptionally low” for an “extended period.” The policymakers could change that wording to effectively commit to keeping rates near zero for even longer than investors now expect, perhaps adding specifics about which economic conditions would lead them to raise rates. Such a move would be opposed by many members of the Fed policymaking committee who are wary of the “extended period” language, arguing that it limits their flexibility.

Another possibility would be to cut the interest rate paid to banks for extra money they keep on reserve at the Fed from 0.25 percent to zero. That would give banks slightly more incentive to lend money to customers rather than park it at the Fed, although it also could cause technical problems in the functioning of certain credit markets.

A third modest possibility would be to buy enough new mortgage securities to replace those on the Fed balance sheet that are paid off as people take advantage of low interest rates to refinance.

Role of mortgage rates

None of those steps amounts to the kind of massive unconventional effort to drive down mortgage rates and prop up growth that the Fed took in late 2008 and early 2009, when the economy was in a deep dive. Then, the Fed began buying Treasury bonds, mortgage securities and other long-term assets — more than $1.7 trillion worth by the time the purchases concluded in March.

Some economists have encouraged the Fed to launch a new asset-purchase program, saying that with the unemployment rate at 9.5 percent and little apparent risk of inflation, the Fed should use every tool at its disposal to get the economy back on track.

Fed leaders view such a strategy as likely to have only a small impact on the economy and as carrying a risk of slowing growth.

One of the key ways the earlier securities purchases stimulated the economy was by driving down mortgage rates, which in turn propped up the housing market. But with mortgage rates near all-time lows, it is not clear that actions to lower rates another, say, quarter percentage point would result in much additional home sales or refinancing activity.

Moreover, the Fed’s purchases of mortgage securities have reduced the role of private buyers in that market, and some leaders at the central bank fear that further intervention could delay the resumption of normal market functioning.

“The Fed probably believes that unconventional policy does not have much traction as market functioning gets better,” said Vincent Reinhart, a resident fellow at the American Enterprise Institute and a former Fed official.

Asset-purchase plan

Another risk is that global investors could lose faith that the Fed will be able or willing to pull money out of the economy in time to prevent inflation. That would lead the investors to demand higher interest rates on long-term loans, which could reverse the rate-lowering effects of the Fed’s asset purchases.

When the Fed was buying $300 billion in Treasurys in mid-2009, part of its try-everything approach to dealing with the crisis, rates on 10-year bonds temporarily spiked amid concerns that the Fed was “monetizing the debt,” or printing money to fund budget deficits. With deficit concerns having deepened in the past year, such fears could be even more pronounced now.

All that said, Fed officials do not rule out launching a major new asset-purchase program. Rather, they say they would consider one only if their basic forecast — of continued steady expansion in the economy — proves to be wrong. A key factor that would build support for new asset purchases would be a rise in the risk of deflation, or a dangerous cycle of falling prices — which has become more of a concern as the world economy slows.

Fed officials express confidence that they have tools to address the economy further if conditions worsen.

“I think we do have a variety of tools available, and we shouldn’t rule any tool out,” Eric Rosengren, president of the Federal Reserve Bank of Boston, said in an interview. “If we’re uncomfortable with how long it’s going to take us to reach either element of our dual mandate [of maximum employment and stable prices], we’ll have to make some adjustments to policy.”

Phony Financial Reform


The huge overhaul bill ignores most big problems and dodges the rest.

THERE IS SOMETHING in the financial-services bill for almost every interest, but the real winners are the cynics who think Congress can’t do anything right. The monster that crawled out of the conference committee on June 25 has about 2,300 pages, and one hostile Republican congressman said it probably has three unintended consequences per page.

It will keep the bureaucrats and lobbyists busy, that’s for sure: The Chamber of Commerce counted 355 potential new agency rule-makings, 47 studies and 74 reports required by the bill. The infamous Sarbanes-Oxley law of 2002 — the previous congressional exercise in futile corporate regulation — demanded only 16 rule-makings and six studies.

The general intent of the financial-reform bill was impossible. Sponsors wanted to reduce the risk in an inherently risky industry, and they wanted to do it without tightly regulating it or subjecting it to the discipline of a free market.

The big issues will remain untouchable.

What is to be done with Fannie Mae and Freddie Mac, the quasi-government agencies that have become the nation’s main source of new home mortgages? There’s no answer in this bill. Converting Fannie and Freddie to Feddie hasn’t stopped them from losing more tens of billions of dollars on bad loans, and it hasn’t brought order and good sense to the housing market.

What is to be done with highly leveraged corporations and hedge funds that play for their own accounts in the world’s riskiest markets, using smart computers and dumb money supplied by suckers who run pension funds and other clueless institutions? This bill cuts back on the game as played by commercial-bank casinos, but it lets the game go on in Wall Street’s back rooms.

What is to be done with the banks and corporate financial subsidiaries that are too big to fail, too big to succeed and too big to regulate? They must carry on like lemmings who haven’t yet reached the cliff. The Treasury will take charge of a new Financial Stability Oversight Council designed to prepare for the next disaster. (Oversight, for those not used to Washington lingo, is partly about watching and partly about talking, but never about doing.)

What is to be done with risky banks? Pretend they aren’t risky. Bank deposits are to be federally insured up to $250,000 per account, retroactively to Jan. 1, 2008. This is supposedly for the benefit of small depositors, but is actually for the benefit of rich people who played “hot money” games with certificates of deposit. As with all deposit insurance, premiums won’t be high enough to cover the real risk.

What is to be done with the Balkanized structure of banking and securities regulation and the even worse congressional oversight structure? Create more regulators, starting with the oversight council. Lawmakers have created new agencies after every financial crisis, seemingly to create more congressional subcommittees with oversight powers. All they do is fight forever with the other agencies created after past crises.

What, above all, is to be done with the Federal Reserve, which pilots monetary policy by the seat of the chairman’s pants and regulates the biggest commercial banks with the results seen so recently? According to this bill, all the Fed needs is just a little more power, especially more power to lend to any quivering corporation in the world.

If the bill becomes widely known as Dodd-Frank, then maybe Sen. Christopher Dodd, D., Conn., and Rep. Barney Frank, D., Mass., finally will acquire the reputations they so richly deserve. It happened to former Sen. Paul Sarbanes, D., Md., and former Rep. Michael Oxley, R., Ohio. Their Sarbanes-Oxley “reform” of corporate accounting and other issues has turned out to be an expensive failure, blighting their names for the history books. Dodd and Frank deserve the same, only more so.