04.30.2010 0

Editorial: A Lamentation of Scott Brown

  • On: 05/20/2010 21:54:31
  • In: Economy
  • It took four months for Senator Scott Brown to be transformed by the Washington establishment, but it has finally happened. No longer the 41st vote against far-reaching government takeovers, yesterday Brown availed himself as the 60th vote in favor of the Dodd financial takeover bill. This came only a day after he had voted no on the very same legislation.

    No significant revisions justified a “yes” vote on this legislation. It still institutionalizes “too big to fail”, perpetuates unlimited bailouts and government takeovers, and establishes limitless powers for the bureaucracy to levy taxes on the American people and monitor their finances, all without any vote in Congress or any opportunity for judicial review of government seizures of private companies. And it still would not address the root, government causes of the financial crisis, including Fannie Mae and Freddie Mac, the Federal Reserve, the Federal Housing Administration, and the Department of Housing and Urban Development’s Community Reinvestment Act regulations.

    Sadly, Brown conditioned his support for the bill on so much less than ending bailouts or addressing root causes of the crisis. All he wanted were exemptions to the Volcker Rule’s ban on proprietary trading for insurance companies and bank asset management in Massachusetts. According to The Hill, “Brown has expressed concerns that Massachusetts-based financial firms, such as MassMutual, could be adversely affected by a potential ban on proprietary trading.” So, assurances in place from Senate Majority Leader Harry Reid that the bill would be fixed, Brown switched his vote.

    This is a sad day for Brown supporters, especially the tea parties that got behind his candidacy on the premise that he stood against Big Government. As a candidate, he even ran against a bank tax on the premise that it would simply be passed on to the American people via higher financial transaction costs. Brown said at the time, “With all due respect, that money is going to be transferred down to the individuals through ATM fees, increased fees. I thought banks were supposed to lend. So now they’re going to take the money that they would be lending to the small businesses in this state and the men and women who want to buy homes … and there’s less of a pool there.”

    Alas, the Dodd bill contains such a bank tax. Institutions with $50 billion or greater in consolidated assets will be charged assessments to finance the so-called “orderly liquidation fund.” There is no cap on those assessments, nor any limit on how much money can flow through the fund. Nor will the assessments require any vote in Congress.

    That’s taxation without representation — and Scott Brown of Massachusetts voted for it. Reverend Jonathan Mayhew, who coined the popular revolutionary slogan in a sermon in Boston, must be rolling over in his grave.

    It gets worse. On April 18th, on CBS’ Face the Nation, Brown said that the bill “doesn’t end the bailout mentality of the big banks are too big to fail concept.” It still doesn’t, and Scott Brown has now voted to perpetuate the concept of “too big to fail” by giving government unlimited bailout authority.

    Just this past Wednesday, after he voted against cloture on the legislation, Brown issued a statement where he said, “the legislation contains loopholes that could leave the taxpayers on the hook for future bailouts of Wall Street.” Then he voted for it anyway, without securing any protections for the American people against future bailouts or doing anything to unwind the current government credit lines to Fannie, Freddie, AIG, GM and Chrysler.

    In fact, without any changes at all — Reid merely promised that his concerns regarding the Volcker Rule would be addressed — Brown switched his vote. For his own Massachusetts carve-out for insurance companies and banks in his state — which reminds one of the ObamaCare “back room deals by an out of touch party leadership” he blasted in his victory speech — Brown betrayed the trust of the American people who had hoped that he might be a different sort of politician. One who puts principle over compromise.

    Scott Brown had a chance to be different by standing firm against the government takeover of the nation’s entire financial system. Instead, he has repudiated the principles of the tea party movement — which was founded in opposition to bailouts — that helped to propel him into office. A movement that can now only lament the tyranny that will surely rise from a bill that allows the government to monitor every financial transaction in the country, seize or bail out any company it wants in the interests of the “financial stability of the United States,” and levy unlimited taxes to those ends. It didn’t have to be this way.

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