Take a closer look at the Dodd-Frank Financial Reform Bill

This multi-part series was written By Jeff Harding Aug 12, 2010 10:30 am and can be found on Minyanville

Understand the changes happening around us. Don't wait untill the results are embeded and unrecoverable. We need to make choices for our future. We need to make educated decisions and not be told what to think.

"The new financial overhaul bill is the greatest government takeover of the financial sector of the economy since the National Recovery Act of 1933 when Franklin Roosevelt attempted to introduce central planning in America."

We are bieng told that these changes are needed because capitalism has failed.

"The problem is that their beliefs are wrong, and they make up data to fit their beliefs. Their conventional wisdom fails to satisfactorily explain the actual underlying causes of this boom-bust cycle and the new law will do nothing to prevent another cycle. The factors they blame for the crash always exist in financial markets, and yet, for reasons they don't explain, actors on the financial stage suddenly explode into an orgy of greed directed at the housing market."

Jeff Harding quickly points to the true cause of the housing bubble, cheap money... and makes clear the riskless position lenders had issuing loans backed by freddie and fannie.

"Everything stems from these two factors yet there's nothing in the Act that prevents the Fed from starting a new cycle or that prevents Fannie or Freddie from again distorting the economics of the housing market. The purpose of this article isn't to go into the ultimate causes of the bust as I've discussed them at length in other articles, but these factors highlight the foundational fallacies of the Act."

Interstingly, the new law has no regulations... it just hands off responsibility to 10 regulatory agencies with discretion to write the new rules.

"Here is the reality: It will take many more years to write and implement the regulations that really define the Act. It may be that some of these regulations will never be written, something that's not unheard of in Washington."

Businesses and investors alike require certainty to quanitfy risk and place bets on the future. This Regime Uncertainty is already causing hesitatoin in our economy. Our treasury secretary is trying to convince us that they can implement just the right balance to curtail "too much freedom for predation, abuse and excess risk," but said it should still seek to "safeguard the freedom, competition and innovation that are essential for growth." I agree with the author, "One might say this is a form of arrogance associated with (almost) absolute power."

This is just from part 1 of his article, good stuff... I encourage you to read more.