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SENTRY JOURNAL » Checkbook Tax, Financial Reform, Frank Luntz, Obama, Wall Street » Financial Reform = Checkbook Tax?

Financial Reform = Checkbook Tax?

In my last post I told people to keep their eye on this financial reform bill.  That the recently passed immigration law in Arizona is being used by Democrats as a distraction to avert the public’s attention from what the left hand is doing in Washington DC.  Of course I am talking about the financial reform bill that up until today Republicans were engaging in a filibuster to block opening up debate on the Senate floor.  They have now decided to end their filibuster and allow debate on the bill to take place.  There are many reasons why this bill is bad for not only our free market system but for the taxpayer.  So it’s time to get our heads back the game.

Frank Luntz wrote a very good article on Huffington Post about this bill.  In the article he stated, “The dirty secret of the Senate financial reform bill is that some of its biggest supporters work on Wall Street.  Recipients of taxpayer bailout money have no concerns about the bill — in fact, the CEOs of Citi and Goldman Sachs have publicly endorsed it, and several of the other big banks have expressed support.  It keeps the “too big to fail” guarantees in place for another generation of financial services companies.”

Why does Wall Street support this bill?  Maybe because it gives them access to a pool of taxpayer money to bail them out when they make bad decisions.  It reduces the risks for the company but increases the risk for the taxpayer.

He continued on by saying, “The Democrats supporting the current legislation have assured an anxious electorate that whatever funds are used to create whatever regulatory scheme created will come from the banks, not the taxpayers.  Let me emphasize that so that even casual readers will catch it: the Democrats promise that you won’t pay for their legislation, banks will.”

Since when have corporations ever paid taxes, fees or penalties?  Employees end up paying in the form of lower salaries and benefits.  Customers end up paying in the form of higher costs.

And in this case, every account holder will be forced to pay higher fees on their checking account and savings account.  That’s you, my friendly reader.  Can you say “checkbook tax“?

Folks this is an indirect tax.  For those of you that don’t know what an indirect tax is let me define it: It’s a tax that increases the price of the good, that is passed on to the consumer by the company or in this case the bank.

Lastly Mr. Luntz sums our concerns up with the following words; Sen. Dodd has bragged that his legislation will create a new super-regulatory agency like we have not seen before — and with good reason.  Every single financial transaction will now be subject to government regulation — from layaway plans to auto loans.  Citibank and Goldman Sachs don’t have to worry about that, but Joe’s furniture store and Jane’s used car dealership do.

The American people are once again hearing the same old song of more taxation, more regulation and more litigation, all because of well intentioned (you read that correctly) but poorly executed legislation.

Read Frank Luntz’s entire article here.

So as you can see, this is another piece of legislation that was written by lobbyist for special interest and when that’s the case the real losers are the American people.  This is a big deal folks and we need to mobilize and contact our elected representatives to voice our deep concerns about this bill.  Don’t fall for trigger words like “Fat Cats” and “Evil Bankers”.  It’s easy to jump on the Marxist economic justice train and yell go get’em.  That’s the beauty of appealing to the emotional side of the debate, you don’t have to address the facts.  However when those pesky facts do get injected into the debate, we see the other side of the coin.

And unfortunately it’s our coin that’s in our pockets.

Liberty forever, freedom for all!


Filed under: Checkbook Tax, Financial Reform, Frank Luntz, Obama, Wall Street

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  • LD Jackson April 29, 2010 at 5:06 AM

    I have mixed feelings about this situation, John. I don't see the problem in the bailout fund that you do, because of it's being funded by the banks themselves. I concede your point that the fund may ultimately be funded by the customers.

    I am all for free markets, but we really ran into a problem with the way the deriviatives market was handled before this last financial crisis. I am no expert, which is why I have written only a little about this, but it seems to me that some sort of regulation is needed on the deriviatives market. From what I can see, one of the things that played a very big part in the crash was the way the traders created and sold products they never actually owned and bet against them, knowing they were going to fall in value.

    No matter how much I like and respect free markets, I can not see how that is a good thing. Without some sort of regulation, how are we to keep that from happening again?

  • Teresa April 29, 2010 at 2:55 PM

    This bill, if passed, is unfortunately going to end up regulating main street instead of wall street. Mom and Pop stores don't need anymore regulations. This bill will hurt the consumer.

    I'm not sure about derivatives but I do know that Fannie and Freddie and the Community Reinvestment Act that forced banks to comply with the government and loan money to people they knew couldn't afford to pay the mortgages was the primary cause of the financial meltdown.

  • LD Jackson April 29, 2010 at 3:39 PM


    Yes, I know and have written extensively about the role the Community Reinvestment Act played in the crash of the housing and financial markets. I do feel the way the derivatives market played out had a big role in the crash as well. From what I can tell about them, the marketing of derivatives was and is a disaster waiting to happen.

  • John Carey April 29, 2010 at 9:58 PM

    Thanks for the comments Teresa and Larry. I agree that the derivatives market played a large role in Banks and Wall Street losing a great deal of money. This was triggered by the housing bust; however the SEC knew what was going on and did nothing. This was a governmental entity that had the power and authority to look into the matter of derivatives and did nothing.

    I believe with all my heart that the more government tinkers with our free market system the worse off we are. There has never been a risk free investment. Risks and rewards are the fabric of our system. There will be losers and winners, but when the feds get involved there tends to be more losers than winners. They have been tinkering with our market since the 1940s and what has it accomplished? We still have boom and bust cycles. We still have loopholes in the system that you can drive a truck through and because of increased regulation the cycles are becoming more volatile. Why? Because the government props up companies that should fail and all we end up with in the end is bad companies that are allowed to exist because of the government. This disrupts the cleansing out of unworthy companies in a free market system. Opportunity is thwarted and young innovative companies are locked out of the market because the dinosaurs that should have become extinct were allowed to live. These same dinosaurs block the entrance of new competition and continue with their crony capitalistic ways, always looking toward the taxpayer to save them. This isn’t how the free market is supposed to work. And we wonder why so many people think capitalism is a failure. When the rules of the game are altered, of course people are going to think capitalism is a failure, because what they are experiencing is not capitalism. Anyway that's my opinion.