Harry Reid: “We will… bring Wall Street to a screeching halt”…. or to be more fair “The Joyride” will come to a screeching halt, but I think the former is closer to the truth. Ending private banks and moving control of all banking inside the government is one of Engel’s principles of Communism.
The crisis that was created by government interference in the marketplace (Freddie Mac/Fannie Mae) is now going to be “fixed” by a new government agency to protect consumers from “Abusive” lending practices. Banks will also be prohibited from engaging hedging activities in derivative instruments. A method is created to tax the remaining banks to dissolve a “too big to fail” bank.
The net effect of all of this (assuming the House agrees and passes a reconciled bill) will be to end the U.S. influence over the world economy. London and Tokyo and Hong Kong and Dubai are not going to stop trading interest rate swaps and credit default swaps. U.S. banks without those tools will not be able to compete in investment banking. Banks in Europe will provide the finanacing to U.S. Corporations (like the Deutshe bank loan to Clear Channel). To stop derivatives, you would have to prevent U.S. businesses from using them. If you do that, you have killed U.S. business and globally owned businesses finish off the U.S. economy.
All without firing a shot.
