Take my eyes off the screens for a couple of hours, and look what happens!

IOC printed a trade at $50.50 today when I wasn’t looking, and then managed a rally to $59 into the close.  That’s still a few dollars under where it was trading when I left to do some errands and then came back to watch C-SPAN follies.

They were debating an amendment to add a measure of consumer protection to the financial reform bill, and I was struck by the series of speeches I heard, every single one of which said they supported consumer protection from financial misdeeds.

Imagine my surprise when Mike Enzi said he wanted to protect the free choice of consumers to borrow from unregulated lenders, and how it would be un-American to take away that essential freedom.

He went on and on about how these lenders were essential small businesses, and how it would be a huge imposition for Big Brother to want to “look over their shoulders” and “make their decisions for them.”

Is he also defending these lenders’  knee-cracking debt collectors as good source of employment for muscular sociopaths that would otherwise by unemployed?

In fact, the proposed amendment was set up to put a new division of the FDIC in charge of protecting consumers, but to make them go to the “parent” FDIC board to make any rules.  It also gave them no enforcement powers.

Then another Senator got up and read the section regarding non-banks — you know, those mortgage brokers, payday lenders, subprime auto finance companies, etc. that sold their lousy loans to Wall Street and stayed well away from prying eyes of regulators by choosing to call themselves other kinds of businesses.

The most-read post on this blog, “Three-Card Monte,” addressed exactly the game being played out here.

It turns out that even the current limited oversight capacity the Fed now has would be eliminated under the Shelby amendment.  (Since 1994 the Fed could step in and regulate non-bank mortgage lenders, but chose benign neglect under Greenspan.)

Quoting the words of the amendment, the only way the new division of the FDIC could reach outside of the existing universe of regulated banks and mortgage lenders would be if a non-bank lender shows a “pattern or practice of violating consumer financial protection statutes,” which another Senator believed had to be demonstrated over a three year period.

Sounds to me like they wanted to screw the legitimate lenders (and the customers) by declaring amnesty for the illegitimate ones.

My immediate question was, would these Shelby-sponsored loan sharks just change their corporate name every three years, like some stores near Times Square and Grand Central Station that sold electronics that didn’t work and didn’t have warranties? You know the places I mean – the ones that are always “Going Out of Business” so you can’t complain if your purchase doesn’t work.  Never mind that the same clerks are there the next week when you come in, they are working for a different company.

Anyway, I started out planning to comment on the 900-point Dow collapse (and 600 point recovery) that happened while I watched what passes for government in America.

I suppose the only thing to say is that you may want to have both buy and sell orders in at “ridiculous” prices if you’re going to even step out for a minute.




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