By Robert Romano –
Does the Dodd bill contain Big Brother provisions?
One of the lessons of this session of Congress is that details matter. Last week, as the Senate began presenting its legislation to take over the financial sector, it became clear that the takeover was even more far-reaching that originally thought. That the private sector itself is now threatened by an endless regime of new bank taxes, limitless government takeovers and bailouts, all without any Congressional approval nor any judicial remedy.
So far, the Dodd bill has been an exercise in the principle that the more the American people learn about this legislation, the less they like it.
Now, it has been revealed that in Section 1071 of the bill (pp. 1417 of the Lincoln-Dodd substitute) that banks will now be required to keep a data log on all depository accounts including, “checking account, savings account, credit union share account, and other types of accounts, as defined by the [Consumer Financial Protection] Bureau.”
What information would the banks be collecting data on? According to the bill, “the financial institution shall maintain a record of the number and dollar amounts of the deposit accounts of customers.” That information would be submitted annually to the Bureau, and would be used, amongst other purposes to “assess the distribution of residential and commercial accounts at such financial institution across income and minority level of census tracts.”
This is probably to help enforce Section 804(a)(1) of the Community Reinvestment Act (CRA) that the Dodd bill would do nothing to repeal. CRA stated that “In connection with its examination of a financial institution, the appropriate Federal financial supervisory agency shall assess the institution’s record of meeting the credit needs of its entire community, including low- and moderate-income neighborhoods…”
One may recall, according to research by former Chief Credit Officer of Fannie Mae Ed Pinto that one of the major causes of the financial crisis was Housing and Urban Development’s CRA regulations that strong-armed banks to make loans to lower-income Americans that ultimately could not be repaid.
From 1992 onward, the Department of Housing and Urban Development (HUD) loosened lending standards by imposing “affordable housing goals” on Fannie Mae and Freddie Mac, adopted “Fair Lending Best Practices” requiring low-income lending, and promulgated new Community Reinvestment Act “regulations applicable to all insured banks, in particular a change from a qualitative standard to a quantitative,” according to Pinto.
While enforcing CRA may be part of its intent, Section 1071 of the Dodd bill would do so much more. Because depository institutions would now be required to submit information on practically every transaction that takes place affecting the balance of every financial account, the federal government would basically now have access to monitor every American’s life savings, and in extension their earnings, purchases, deposits, and transfers.
So, if a father wants to deposit his son’s $10 birthday check into his savings account, that will now be recorded in a government ledger somewhere. Surely, government cannot believe this will save us from another financial meltdown!
Ranking Republican Member of the Senate Banking Committee, Richard Shelby, doesn’t think so. In a floor speech last week, he said, “I wonder how any crisis will be prevented through data collection from banks about deposit accounts of their customers to identify community development opportunities as found in Section 1071 of this bill.” Indeed, this section appears to have much less with addressing any root cause of the financial crisis than in asserting yet more government control over the individual.
Said Shelby, “This bill establishes overarching bureaucracies without any meaningful protections for our financial privacy rights… It is a pure power grab that can reach into virtually every facet of our economy and it needs to be restrained.”
Ultimately, this provision monitoring every bank account in the nation will bring government one step closer to creating a cashless society, to collecting tax revenue via the banking system, and to eliminating individual control over his or her own finances. These dangers, if not repelled now, will assuredly lead to liberty lost.
This detail is one that the American people need to learn more about, because the Dodd bill threatens not just financial institutions, but every individual citizen’s ability to govern their own affairs, free of government intrusion and an oppressive Big Brother monitoring regime.
Robert Romano is the Senior Editor of ALG News Bureau.