Lawyers and Taxes

Perhaps a voter from Delaware said it best when he called the Kilroy provisions in Dodd-Frank act on behalf of the trial lawyers, "still another reason to keep the Democratic Party contribution spigot wide open." 

It's no wonder that Nancy Pelosi made sure that Congresswoman Kilroy was on the conference committee of the so called Wall Street Reform bill when it was being finalized. Neither of them wanted to risk having the trial lawyer giveaway provisions stripped out of the final version of the bill.

It was very encouraging to read U.S. Congressman Jeb Hensarling (R-TX) state that the Dodd-Frank Act that would only benefit "trial lawyers and government bureaucrats." Perhaps lobbyists should also be added to that illustrious group. 

So while it great that there was overwhelming opposition to the Dodd-Frank bill from conservatives in Congress, it is just a little worrisome that the Pledge to America didn't specifically address the trial lawyer giveaways in the Dodd-Frank Act or mention the damage the provisions have caused in the bond market or the pain in store for small businesses, local and state governments, and taxpayers everywhere.

It is very likely, however, that a victory for conservatives in November will signal a new ability and willingness to roll back the trial lawyer inspired language that is already causing problems in every aspect except, of course, for the ability of Democrats - like Pelosi, Kilroy, and Frank - to raise loads of cash from lawyers for the upcoming election.

On to November, on to Victory, and on to the Repeal of the Dodd-Frank liability provisions sponsored by Congresswoman Mary Jo Kilroy and Speaker Nancy Pelosi!

This comment on a Redstate.com post back in July precisely identified the key problems with the Dodd-Frank act. As the voters in Delaware and New Hampshire make their voices heard in opposition to higher taxes, trial lawyers, and new government bureaucracies; our friends in Congress need to keep the pressure on to repeal the Dodd-Frank act and to get rid of the Kilroy-Pelosi amendment.

See Today's Wall Street Journal For An "Unintended" Consequence of The Dodd-Frank Disaster

Ausonius Thursday, July 22nd at 10:55AM EDT (link)

On page C1 and continued on C8 there is an article about Ford pulling out of plans to issue new bonds backed by packages of auto loans because the ratings firms in America have been almost terrorized by the Dodd-Frank Bill.

In this excellent blog post from RadioViceOnline, the author points out that the new legal liability provisions in the Dodd-Frank Act aimed at enriching the trial lawyers will actually make it more difficult to build new police and fire stations with municipal bonds.

Dodd/Frank financial reform…haste makes confusion

September 7, 2010 at 3:57 pm by SoundOffSister 

The recently enacted Financial Reform bill, brought to us chiefly through the efforts of Senator Dodd (D. Ct.) and Congressman Frank (D. Ma.), was, like much of the handiwork of this Congress, passed in haste. Remember, something had to be done immediately so that we never have another financial meltdown like we just had?  This bill, too, was ponderous, consuming 2300 plus pages, and, like Obamacare, probably wasn’t read by anyone who voted for it.  Well, as Speaker of the House Pelosi (D. Ca.) would have said, now that the bill has passed, we can see what is in it. 

Within days, what we saw was problematical, and, I’m guessing this is the tip of the iceberg.  Here are just two of the issues.

The first involved the $1.4 trillion asset-backed securities market.  This is the market where corporations and municipalities sell bonds to raise funds for certain specific projects.  As an example, your town might issue bonds to cover the cost of a new police and fire station. 

What happened here was that under SEC regulations, any bond issue sold must have a rating from a “credit rating” firm, such as Moody’s or Standard & Poor’s.  The Dodd/Frank bill, however increased the legal liability of these credit rating agencies (a lawyer’s relief act), so the companies refused to provide ratings in bond deals.  The bond market screeched to a halt.  After a few days, the SEC had to “suspend” its long standing regulation of requiring credit ratings, and allow the bond deals to proceed without a credit rating.

The second involves the process by which the FDIC gauges the soundness of banks.

Banking regulators were “weeks away” from finalizing a long-running effort to set risk-based capital standards for smaller, less-complex banks, say people familiar with the matter.

But now, thanks to the Dodd/Frank Bill, it is anyone’s guess when that will happen.  Bank regulators had planned to use credit ratings as part of that process, but the bill bans the use of credit ratings in setting those standards. 

As Comptroller of the Currency John Dugan, an FDIC board member said,

I do worry about there is a little bit of throwing out the baby with the bath water. It might be worth Congress taking a second look at.  [emphasis supplied]

Anyone think Senator Dodd and Congressman Frank will do so?

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