It hasn’t taken long for Peter Schiff, who recently announced he’s running against Chris Dodd and others for his Connecticut Senate seat, to attack Dodd over his recent proposal to create a super regulatory agency by combining four existing regulatory agencies into one.
The four agencies Dodd would want to make into one include the Federal Reserve, the Office of Thrift Supervision, the Federal Deposit Insurance Corporation and the Comptroller of the Currency.
Dodd’s point of view is that the reason there was a economic crisis last year was in a large part because banks were allowed to choose which of the above four agencies they wanted to regulate them. He also asserts these agencies weakened regulations so the banks would choose them as their regulator of choice.
Schiff responded to the proposal of Dodd in a press release, saying this:
“Existing regulators had all the powers they needed, and more, and they failed miserably to foresee and prevent this crisis. Chris Dodd is now asking us to put all our eggs in one basket and trust a ‘super regulatory agency.’ He should know better than to centralize power in the hands of Washington bureaucrats – it’s precisely the arrangement that caused our current problems. I think most Connecticut voters know that we need fewer czars in Washington, not more. As long as Fannie and Freddie and Congress are meddling with the economy, changing the structure of the regulators is basically rearranging deck chairs on the Titanic.
“Dodd’s proposal takes regulatory authority away from one unaccountable institution and gives it to another even bigger one. This will not solve our problems.”
Dodd wants to see his plan become law by the end of 2009, but it’s highly unlikely it will, if it’s even brought to a vote.
As far as other problems Dodd faces in the election is his financial credibility, as he asserted almost up to the time the housing market fell apart that it was foundationally healthy and strong, while Schiff rightly predicted the economic and housing crisis we’re still going through.
No matter, Schiff is right in what he says concerning the creation of an agency that would be more powerful than even the Federal Reserve is at this time; it would recreate and exacerbate the problems, not deal with them.
It doesn’t make sense to respond to the need of reining in the Federal Reserve by merging it with other agencies under a much larger power umbrella, and think that’s going to take care of the situation. This is extraordinary shortsightedness by Dodd, who is only looking at it from the point of view of regulatory agencies fighting to see who gets to regulate who, while abandoning or compromising their regulatory responsibilities.
He mentions nothing of the Federal Reserve, other than simply reducing their power while creating an even larger regulatory power. We need less of that and not more, and Schiff is right in opposing this for that reason alone. The Federal Reserve at its current level of power is completely out of control, picture what a super regulatory agency would be like and do if actually created.
It is very interesting to see some truly interesting and knowledgeable political candidates like Rand Paul and Peter Schiff not only enter politics, but have some really good ideas, economic understanding and ideas to effect some real changes the American economy and markets need. It’ll be a hoot to see them covered from their insights and comments while their detractors helplessly and haplessly attempt to undermine them. How about three Dr. No’s in the House and Senate? Sounds good to me.