GOP Prez Candidate Regrets Repealing Glass Steagall

 

At the South Carolina Tea Party Coalition Convention in Myrtle Beach, I asked GOP presidential candidate and former Senator Rick Santorum whether he would break up the banks and reinstate Glass Steagall, the Depression-era law that created a firewall between commercial and investment banking. The idea was to shield traditional banking assets from risky, speculative trading activities.

Glass Steagall was partially repealed under the Clinton administration in 1999, with the passage of the Graham-Leach-Bliley Act, a supporter of which was then-Senator Santorum. The repeal allowed for already big banks to become Too-Big-to-Fail behemoths, and thus has been widely cited as a cause of the 2008 financial crisis.

Although Santorum regrets his GLBA vote, he would nonetheless repeal Dodd Frank.

Sun., Jan. 17, 2016.

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GOP Rep Will Vote to Let Homeland Security Funding Lapse

At the South Carolina Tea Party Coalition Convention, I asked Rep. Tom Rice (R-SC 7) if he would vote for a clean appropriations bill for the Department of Homeland Security, that is one without the Republican riders defunding President Obama’s executive order on immigration. Chuckling, the South Carolina congressman said he would vote against a clean bill. Rice was hardly alone in that sentiment, although other legislators in attendance, such as Senator Ted Cruz (R-TX), were not quite as concrete in what actions they would support. While Cruz said that he was pressing his colleagues to use the “power of the purse” to fight back against President Obama’s “unconstitutional amnesty,” he stopped short of saying whether or not he would let the department’s funding lapse.

On Sunday, DHS Secretary Jeh Johnson told CNN that 30,000 workers, primarily administrative employees, would be furloughed if funding for the department is not approved by Congress by February 27. The Federal Emergency Management Administration (FEMA) would be particularly hard hit, with approximately 80% of its staff subject to the cuts. This presents an ideological quandary for Republicans, who traditionally emphasize defense spending in their party platform.

A lapse in funding would not impact the critical operations of DHS, though. Workers with Border Patrol, the Coast Guard, and the TSA would still report to work, they just wouldn’t be receiving paychecks. So while the security threat may be low, the threat of backlash to the GOP from angry public employees is very high. Watch the video below to see Rep. Rice’s answer…

Ben Carson Doesn’t Understand Bank Loans

Ben Carson Bank LoansGOP presidential aspirant and former neurosurgeon Ben Carson had an interesting idea about bank loans when asked about rising interest rates and the national debt, at a closed door gathering of Americans for Prosperity at the South Carolina Tea Party Coalition Convention. He asserted that banks have no incentive to loan people money when the interest rates are near zero.

According to Carson:

And what about the banks? Why would they loan you anything? You want to start a business? Why are they going to loan you something with an interest rate of 1%? There’s no incentive for them to loan you anything.

Actually, the opposite is true — when interest rates are near zero, banks are able to get money from the Fed for nearly free, thus increasing their profit margins when they then loan that money to consumers or small businesses at a much higher rate. The more likely reasons banks are not lending to small businesses are tightened credit standards, reserve ratio requirements, and the opportunity cost to banks, which can make more profit off speculative bets. Add to that the rash of community bank failures during the 2008 financial crisis, causing a tightening of available credit in many areas.

In an interview from August of last year, Biz2Credit co-founder Rohit Arora told the Wall Street Journal, “The failure of so many small banks [in Georgia] has created a credit desert.”

It is indeed true that lending to small businesses has not recovered since the meltdown, but it’s not because interest rates are too low… Maybe Ben Carson should stick to medicine.