Saturday, July 10, 2010

Re-emergence of quotas

An interesting story has recently begun circulating in regards to the Dodd-Frank Financial regulatory bill. Before I get to it, a few comments of my own. First, the bill does not address derivatives. Anyone with any economic sense understands the key role derivatives played in the housing sector collapse of '08. This involves the packaging and reselling of mortgages to big companies who take on the risk. If the company is really big and takes on a lot of risk then you get an AIG-like scenario. Derivatives are ignored in the bill.

Second, there is absolutely zero reform of Fannie Mae and Freddie Mac. None. Nada. Zip. Basically these two companies just continue doing business as usual if this bill gets passed. Again, anyone with any economic sense understands that Fannie Mae, perhaps more than any other company, played a major role in the housing collapse. Yet they get a free pass.

However, what is included is a reintroduction of hiring quotas. According to sectio 342, any financial company doing business with the federal government will be REQUIRED to employ a certain percentage of minority and women employees and these requirements will be overseen and enforced by 20 new government agencies. Yes, private companies will be FORCED to hire people based purely on gender and race. Does this in any way conform to our belief in equal rights and equal protection? Of course not. But this President and this Congress sees it differently.

This is a bad bill. The GOP will stand against it and they, of course, will be attacked for it. They'll be accused of standing up for Wall Street, placating to greed, looking out for big business, etc. Typical politics. No one would dare suggest the GOP is standing up for equality. Hopefully, reason and truth will prevail. Hopefully this bill will be killed.

No comments: