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Saturday, July 17, 2010

Financial Reform Will Be Paid For- By Taxpayers

Barack Obama promised that he would not raise taxes on main street Americans, yet with all the new reforms, regulations and laws Obama and his Democratically controlled House and Senate keep passing, it is mainstream America that picks up the tab, each and every time.

The purpose of the promise was to assure middle class Americans would not have more money taken out of their pocket, right?

As with every other bill and proposal that Obama and Democrats consider great achievements, it is the American taxpayer that pays the costs out of their pocket.

The latest example is the financial regulation bill that Obama has been touting and the facts are laid out clearly in an AP report:

Big banks facing big drops in revenue are looking to Main Street to make up the difference.

Checking accounts, bank statements, even popping into your local bank branch could carry a hefty cost as the nation's mega-banks scramble to offset expected damage from the sweeping financial overhaul. The uncertain future has overshadowed otherwise strong second-quarter earnings at JPMorgan Chase & Co., Citigroup Inc. and Bank of America Corp.

All three companies beat expectations this week with profitable results. Yet their stocks tumbled, helping send the wider market sharply lower Friday.

The reason: Investors are worried about banks' future earning power after Thursday's passage of the most dramatic rewriting of banking rules since the Great Depression. Adding to the pessimism are falling trading profits — which all three banks mentioned in the their earnings reports — and weak U.S. loan demand.

The illusion that gets sold is big government is going to regulate big business in the name of protecting the consumer. Some taxpayers seem to buy into that illusion every time, then cry out in outrage, indignation and anger when they realize they have been had, yet again.

Anytime the government takes revenue away from big business, big business, in return, is going to charge their consumers more for their products to offset those losses.

JPMorgan Chase CEO Jamie Dimon phrases it perfectly when he states "If you're a restaurant and you can't charge for the soda, you're going to charge more for the burger. All these (regulations) will eventually get priced into the business."

[Update] Must read WSJ piece titled "About That Financial Reform 'Victory' "