Rep. Gohmert: Wrong As Ever On Wall Street Reform Bill

Last night on the House floor, Rep. Louie Gohmert (R-TX) took a few seconds out of a busy hour to attack the newly-minted package of regulations to prevent future financial meltdowns. Gohmert claimed, without offering a shred of evidence, that the Democrat-sponsored legislation "creates a system of bailouts as far into the future as anybody living today can see."

Watch:

REP. LOUIE GOHMERT (R-TX): Another problem in this financial deform act is that it creates a system of bailouts as far into the future as anybody living today can see. When anyone says that a company or a bank is too big to fail, then it is absolutely essential that they be allowed to go through bankruptcy, be declared a failure, re-organize, sell off some of their attractive assets so never again will they be so big that they will pose a risk to our economy.

In fact, the bill does exactly what Rep. Gohmert says he wants. It guarantees that failing financial giants will be wound down, not bailed out, in a consistent, rational manner using funds collected from the biggest firms in the industry, not taxpayer dollars. In effect, the process will be very similar to traditional bankruptcy proceedings — but without causing the panicked sell-offs that followed the Lehman Brothers fiasco.

In the New Yorker, James Surowiecki explained some of the highlights:

The consumer financial-protection agency...has the potential to become the equivalent of an F.D.A. for financial products, and is a solution to one of the system's biggest problems, which is that we've relied on bank regulators (who are worried about the financial well-being of banks) to also look after the interests of consumers (whose interests are sometimes opposed to those of banks)... Valuable as this new agency will be, the creation of resolution authority for big banks could be even more important for the health of the system as a whole. The bill has been subject to considerable criticism because it doesn't break up the country's biggest banks, with people saying that this leaves our Too Big to Fail policy in place. But while the bill doesn't do much, if anything, about the "Too Big" part, what it does do, at least in theory, is make it possible for even too-big institutions to fail, by creating a mechanism that will allow the government to, in effect, place failing institutions under conservatorship, and wind them down over time, thereby avoiding both the chaos of the Lehman Brothers bankruptcy on the one hand, and the need to give troubled banks government-subsidized handouts on the other.

The bill doesn't impose an arbitrary cap on the size of a bank — the sort of direct meddling in the free market that conservatives like Rep. Gohmert usually decry — but it does take significant steps to end the bailout culture. Gohmert's response is to hurl invective about the "financial deform act."

Luckily, the leaders of Gohmert's caucus have a more mature response.

Wait, no, they just want to repeal the entire thing.