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Bulls & Bears
Brenda Buttner was joined by Gary B. Smith; Tobin Smith; Brian Sullivan; Pat Dorsey and Mark Levine.
Will Government Agency Promising to "Protect" Consumers Cost Jobs?
Tobin Smith, NBT Media: This is absolutely a job killer, and the unintended consequences of this consumer protection agency are starting now. More and more kinds and extensions of credit will come under the tent of bureaucracy. As a result, and bank doesn't lend as much, businesses can't get as much credit, and don't hire as many employees as a result.
Mark Levine, Radio Talk Show Host: This new consumer protection agency would allow consumers to know the truth. It's designed to let consumers know, for example, that if they borrow $100, after four years and 23 percent interest, suddenly they're paying $400. The only people who are going to lose jobs are people trying to scam consumers. I don't care if they lose their jobs when they've already lost their souls.
Brian Sullivan, Fox Business Network: This will create jobs--bureaucratic jobs in Washington, DC. You may not like major banks like JP Morgan Chase. But if you make them spin off their trading desks, hedge fund units, those are the units making money. What's left is a bank with a bunch of loans that may or may not go bad. As a result, they're going to pull back loans and credit to businesses, and jobs would be lost as a result.
Gary B. Smith, TheChartman.com: We already have extensive laws for consumer protection. The government just has to actually go out and enforce them. This is the Obama administration's way of taking over our entire economy. This is going to be yet another government agency getting in the way between businesses and consumers. We've seen what happened in the credit card industry, and the rates that have gone up since it was reformed. It's harder to get credit cards, and credit is limited. Wealthy investors and entrepreneurs who come up with money to fund companies like Google would be restricted. This agency would make it take months to get approval to make loans or invest.
Pat Dorsey, Morningstar.com: Part of the problem now is that there are anti-fraud, anti-predatory lending laws on the books that are poorly enforced. These laws are out there so there's no point in creating a second set of regulation that won't really get enforced either. What I don't want to see is this whole bill killed though, because there are some positive aspects to it that will clean up the regulatory structures surrounding large banks.
Health and Human Services Report on Health Care Law: Proof It Drives Up Costs, Not Down?
Gary B. Smith: For months, we've be saying there is not going to be a pony under the Christmas tree. This report proves it. I think it actually low-balls this $300 billion deficit over ten years. I think it's going to be ten times that. The problem with these health care reforms is that it will drive up demand far beyond supply. Some companies are talking about getting rid of their insurance plans because it'll be cheaper to just shove their insurance onto the government.
Mark Levine: All you have to do is read the report to find there's nothing wrong here. If you're currently uninsured, you're going to have to pay some money, but you get health care. If you're currently insured, you save money, paying less for health insurance. It's good for people who currently get health insurance. Extra money paid by the currently uninsured will got to help offset rising costs. Costs will increase about 1 percent over ten years, a negligible amount through which everyone becomes better off.
Brian Sullivan: Look at the cost curve growth in Medicare since it began--a massive increase. What's going to happen here is like what's gone on in Canada, where wealthy people pay their taxes and leave the system to get health care elsewhere. If you've got enough money, you see private doctors and pay cash. If health insurance companies start losing the healthy and wealthy and do their own thing, then the insurance pool turns into people who typically are in worse health, and costs skyrocket.
Tobin Smith: Speaking as a business owner myself, there's huge incentive to take our people off company provided insurance and allow the government to assume responsibility because it doesn't make financial sense for us to pay the rate. When people have to go self-fund insurance plans, the government mandated they get Cadillac plans which are more expensive and offer things people likely don't want or need. Basically, people will end up paying the fine for not having health care since it's cheaper, then jump to insurance when they get sick, and drive costs up enormously.
Pat Dorsey: This report really doesn't surprise me. The focus of these reforms was increasing coverage. We can argue all day if this was a good or bad thing. But that was the focus. It didn't go after the root issue, as in, how are we going to pay for health care over the long term in the U.S. Nothing fundamental about cost savings was ever on the table. The system is so broken, to address the root causes, you'd have to blow it all up and start over. No one was willing to do that.
Is Government Creating New Housing Bubble With Your Tax Dollars?
Tobin Smith: This is a fact. The federal government is giving 90 percent of home mortgages out the last 18 months. We're just creating a new Cash for Clunkers for houses. The government has created this market. When it goes away, we'll find the true market isn't at this level, and taxpayers will want their $13 billion back.
Mark Levine: This is not going to cause a housing bubble. The reason is that this is a short-term program much like Cash for Clunkers. Cash for Clunkers kept the auto market doing well during the worst of the recession.
Brian Sullivan: If you want a private sector loan, you have to have a credit score of about 720, to get a FHA loan, you have to have a credit score of 580. So we're extending loans and mortgages to people with bad credit. Sound familiar? And when the government starts implementing policies like this, it gets me a little nervous.