I have read the 85 page document produced by a working group at the White House, and released last night. This document is the White House's wish list. It summarizes what the Obama administration will ask for. The document is not the proposed statute. A statute encompassing all that is discussed in these 85 pages will no doubt consume many hundreds of pages, and will require analysis of it when it is generated.
The theory of the proposal is that greed in the free market caused the meltdown that the markets have sustained during the past eight months. The bias of the drafters of the proposal is that government knows best, the Constitution should not be an obstacle to the egalitarian goals of the government, and no private behavior is beyond the reach of the government's huge hand. The essence of the proposal is to give to the Federal Reserve the authority to regulate any aspect of any firms that, in its sole discretion, could adversely affect the economy should they fail. The Fed would thus be the only unregulated private entity on the planet. This private, super secret bank, half of whose board is appointed by the President, is the most secret aspect of the federal government. The job of the CIA is to steal and to keep secrets. Yet, we know more about the CIA than we do the Fed.
The Fed is a private, completely unregulated bank, into which the administration proposes to repose all regulatory authority from the compensation of executives to the investments companies make, to the location of their franchises, to the amount of fat in McDonalds' hamburgers, without appeal and without stating the reasons for the regulations. All grouped investments, even if the investors own the group, like hedge funds, will be subject to the Fed's new rules. All state chartered banks will now be subject to the Fed. All businesses, whether financial in nature or not, that are owned by any financial institutions, shall be subject to the Fed. Even Mom and Pop shops and stores, if, in the Fed's opinion could fail and thus produce systemic harm to the economy, shall be subject to the Fed. The Fed shall have the authority to require lawyers and accountants to report data to the Fed that even the IRS presently lacks. There appears to be no limit to the private human behavior that the Fed cannot find a way to regulate under this proposal.
What is left out of this proposal is: Who will regulate the Fed? What will become of clauses in the Constitution that prohibit just this type of regulation? What has become of "free" in the free market?