Peter Schiff a/k/a “Dr. Doom” is known for extremely bearish views on the United States stock market, bond market, the US dollar, and the United States economy in general. He tells Yahoo Finance why the Dodd-Frank financial regulation reform law will fail:
1. The bill doesn’t get to the root causes of the crisis. Schiff blames former Federal Reserve Chairman Alan Greenspan’s ‘too low for too long’ interest rate policy, combined with government-guaranteed mortgages for the rise and fall of the housing market. “That’s continuing today, it’s untouched by this bill. In fact, the Fed is more reckless today with zero percent interest rates than when they were one percent,” he tells Aaron in this clip.
Plus, with so many private lenders out of business, the government is guaranteeing an even greater percentage of the mortgage market and has given Fannie Mae and Freddie Mac an unlimited line of credit until 2012.
2. The law fails to end ‘Too Big to Fail.’ “This law now guarantees that in the future even if they don’t want to bailout these banks they actually have to,” Schiff protests. “Designating a federally supervised wind-down process for major financial firms, the new structure signals to creditors that lending money to large financial firms will provide more security than loaning to firms too small to qualify for the program. As a result, these firms will enjoy continued advantages in the marketplace which will ensure the continued industry dominance.”…
[continues at Yahoo Finance]