The monetary system, the Federal Reserve and the SEC are the cause of corruption in our economy, and giving them more power will only make things worse.
Channel: Fox Business
Ron Paul: The SEC is a Total Failure and Part of the Problem
Stuart Varney: The passage of a regulation bill, a financial reform bill, is it now a sure thing because of the Goldman charges? Republican Congressman of Texas Ron Paul joins us on the phone from Lake Jackson in Texas. Congressman, thank you so much for joining us. The premise of my question and the premise of the interview is, “Bearing in mind the Goldman charges, does this now make financial reform more likely, indeed, a certainty?”
Ron Paul: I think so. Yes, I don’t know about the certainty but yes, it’s more likely. And I always assume there would be more regulations so this more or less supports that position, which I think is exactly the opposite way to go. I think this whole episode of the SEC now filing charges against Goldman Sachs, it proves the SEC is inefficient. They’re supposed to prevent problems and here they are coming up 3 years late making charges. What do we want to do? Give them more power to regulate? And I think they proved that they’re a total failure.
Stuart Varney: What’s your general position on the big banks? The big investment firms of Wall Street? Do you think they’re up to tricks? Do you think that they are tricking us? Is it, I hate to use the word conspiracy, but are they ganging up to beat up on the little guy?
Ron Paul: Absolutely. It’s the system and it’s the Federal Reserve system of money and banking that invites this. Bigness alone isn’t the reason. You know, if we had free market banking, people were honest, not committing fraud, and they had a lot of customers, I would think that is fine. But if they’re big because they had inside information from the Fed and they get loans at 0% from the Fed, and they can go out and do all the gambling they want, I mean, that’s where it’s wrong and the little guy gets squeezed. Right now, they’re making money on Wall Street, but the little guy has trouble getting a loan and the people are still losing their houses, so it’s rigged against the little person.
Stuart Varney: So to sum it up, you think that we are going to get pretty Draconian new regulation of Wall Street and it’s going to happen in the very near future?
Ron Paul: Always does. It happened in the Depression, it prolonged the Depression. After Enron, we had Sarbanes-Oxley. Yet all the fraud of Enron was taken care of by anti-fraud laws in Texas. They all went to jail, it didn’t last nearly this long, and here we defend on the SEC. This SEC, like the Federal Reserve, creates the moral hazard. Everybody goes “Oh, the Federal Reserve, they’re there, they’ll take care as the lender of last resort. SEC, oh, they’re out there checking these guys, so they all must be safe. They’ve given their approval.” So it creates all this gambling and speculation.
So what do we do when they finally get into trouble? Do the people wake up and say “Well, it’s the monetary system, it’s the Federal Reserve, and it’s the unwise interpretation of regulations.” So what do they do? They give the Fed more power, and they go and give the SEC more power to regulate.
You cannot regulate the mistakes made by the Federal Reserve and easy money, and that’s what they’re trying to do. The people are going to go along with it. Congress is all for it. If you vote against it, you and I sounds like we’re sympathetic about the system, how it’s unfair to the little guy. But I’m not going to vote for more of these regulations because I don’t think that is the answer. But politically, it’s a great story. “Oh, we’re sympathizing with the little guys, so therefore, all we need is a bigger SEC”, which is part of the problem.
Stuart Varney: I think it’s a political victory for the Obama administration. That’s my opinion. I think you share it too.
Ron Paul: I agree with you.
Stuart Varney: Congressman Ron Paul, we appreciate you being with us.
Ron Paul: Thank you.