It’s uncanny how the Obama administration can continue to pursue an agenda that is diametrically opposed to the correct way to turn around this economy. If Reagan were here you know what he’d say. Mr. President, there you go again.
And so we go with this month’s attempt at further socializing the United States of America. We’re facing Senator Dodd’s Financial Regulation Plan that, if enacted, will continue to smother our free market economy with government over-regulation.
Do we need to learn from what has happened on Wall Street and make the necessary adjustments? Absolutely. But why we need to continually swing the pendulum so far left that it actually comes unhinged and flies off of its axis I’ll never know.
Senator Dodd’s proposal is dangerous for many reasons. Yes it creates a protected class of “too big to fail” firms that in all irony to the problem we’re trying to solve allows these firms to take on undue risk knowing that they will get bailed out in the end.
Yes, the proposal provides for the seizure of private property without the checks and balances necessary to restrain an over aggressive government.
Yes it allows yet another government bureaucracy, the FDIC, to have permanent bailout authority with a fund of $50 billion.
Yes, it actually limits the choices we as American consumers will have by creating a new Bureau of Consumer Financial Protection that will limit financial products that can be offered.
Yes, it actually enriches trial lawyers by placing a ban on arbitration agreements with financial firms forcing all of us into the arms of those friendly trial lawyers.
Yes, it also subjects non-financial firms to financial regulation such as any company that holds assets for future use.
Yes, it allows activist groups, like unions, to leverage the proxy process in order to influence the board of directors by placing individuals on boards that are not there to represent the shareholders but their special interests.
But where it hits home for a venture capitalist like me is that it fundamentally changes the ground game when it comes to investing in small start-ups in America. Dodd’s proposal would increase the threshold requirements for any individual or “angel investor” who would like to invest in a start-up thus reducing the overall pool of possible capital. Further it would require the start up to have to file with the SEC and go through a 120 day review and it would force these start-ups to have to enter into a state-by-state regulatory review if their investors came from multiple states.
This will kill America. It is the private investor investing his hard earned dollars into the small businesses of America without any government interference or regulation that drives our economy and overall job creation. Smothering this ability will kill any incentive to invest at all ultimately killing the backbone of job creation in our country, small businesses.
The proper response here is not the Dodd proposal. We need to do two things. First, understand the nothing is too big to fail and amend our bankruptcy laws to accommodate the complexity of firms in our financial sector and deal with bankruptcy in an efficient enough way to prevent financial collapse. Second we need to reduce risk by implementing stronger capital and liquidity standards so we minimize how far out on a limb financial organizations can get.
But people like Senator Dodd are jeopardizing the core of the American economy. Are these guys nuts? They simply have no experience on the front lines of ever having to run a business, make a payroll, invest in an idea and carefully nurture it so that it grows. They think that through regulation they can create an entirely new economy. Well they’re right about that. They will. We just won’t call it the free market system anymore. We’ll call it by its rightful name. Socialism.
That’s why we need common sense, non-politician businessmen going back to Washington to straighten out this mess; because unless you’ve walked the walk your talk is meaningless. You can’t understand how to solve our economic problems unless you’ve had experience doing exactly that. And people like Harry Mitchell and Nancy Pelosi simply don’t, not to mention the leader of our country, President Obama.
Yes, Reagan would say Mr. President there you go again. I think what we need to say, as an American electorate, is Mr. President, Mr. Dodd, Mr. Reid, Ms. Pelosi and Mr. Mitchell, just go.
