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We're all Bozo's on this bus: the wisdom of Dodd-Frank

At some point Congressional imbecility becomes malfeasance. The Wall Street Journal today reports: 

Standard & Poor's, Moody's Investors Service and Fitch Ratings are all refusing to allow their ratings to be used in documentation for new bond sales, each said in statements in recent days. Each says it fears being exposed to new legal liability created by the landmark Dodd-Frank financial reform law....

That is important because some bonds, notably those that are made up of consumer loans, are required by law to include ratings in their official documentation. That means new bond sales in the $1.4 trillion market for mortgages, autos, student loans and credit cards could effectively shut down.

There have been no new asset-backed bonds put on sale this week, in stark contrast to last week, when $3 billion of issues were sold. Market participants say the new law is partly behind the slowdown.

"We are at a standstill right now," said Bingham McCutchen partner Ed Gainor, who specializes in asset-backed securities.

Several companies are shelving their bond offerings "indefinitely," according to Tom Deutsch, executive director of the American Securitization Forum, which represents the market for bonds backed by assets such as auto loans and credit cards.

The first unanticipated consequence of this bill shuts down an important segment of the capital markets! The manner by which Congress operates is simply reckless. This is the very essense of malfeasance in matters of national economic importance.

Meanwhile, ABC News awakes from its slumber to report today that "Starting Jan. 1, 2012, Form 1099s will become a means of reporting to the Internal Revenue Service the purchases of all goods and services by small businesses and self-employed people that exceed $600 during a calendar year...."  This, of course, is an unprecedented burden on small businesses which will further impair job growth. The intent of the bill was to capture & record purchases of gold and silver, don't you know for more taxation.  The consequence of this, however, will be to further impair job growth by placing new, costly & burdensome regulations on small companies that are already stressed. 

There will be more unintended adverse consequences, and the severity will increase.

People shouldn't wonder why there is a crisis of confidence. We're all Bozo's on this bus, so the market drops another 100 points and the 10 year Treasury pushes 2.90%.

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