Glenn Beck suggested that the financial regulatory reform law would let President Obama "take over Fox" if he determines Fox News is being "too negative." In fact, the law allows the government to seize only banks and other financial organizations "substantially engaged" in financial activities and solely if they are in "financial distress" that "pose[s] a threat to the financial stability of the United States."
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Beck's conspiracy theory: Financial reform would let Obama "take over" companies like Fox News
Beck suggested law would let Obama "go in and take over Fox." While discussing the law with Rep. Michele Bachmann (R-MN) on his radio show, Beck suggested it would let Obama "go in and take over Fox" if he said the company was "hurting the economy." Bachmann responded, "Well, under this law, that would be possible now."
From the July 15 edition of Premiere Radio Networks' The Glenn Beck Program:
BECK: How much of a stretch is it to think that a company that could be a threat to the economy -- because that's how really too deem to fail is kind of secondarily expressed in this bill -- a threat to the economy would be News Corp. I mean, why couldn't the president just go in and say, "You know what? What you guys are doing, what you guys are saying is hurting the economy; it is bringing things down. You're being, you know, too negative." Well, you could make a million excuses and go in and take over Fox. Couldn't you?
BACHMANN: Well, under this law, that would be possible now.
Flashback: Beck and co-host Gray falsely claimed House version of bill would let government take over non-financial institutions. On the June 25 edition his radio show, Beck stated that while "Obama did inherit a bad situation," "he has made it 1,000 times worse and created a situation to where the state can grab power like crazy." He then pointed to the financial reform bill as an example of government's "frightening" power, saying that under the bill, "they can grab companies" that "they think" are "a danger to the nation." Gray added: "[T]hat's any company that they deem big enough to harm the economy, they can take control over." In fact, both the House and Senate versions of the bill allow the government to seize only banks and other financial organizations "substantially engaged in activities in the United States that are financial in nature," and only if they "pose a threat to the financial stability of the United States."
Law authorizes regulation of banks and "nonbank financial" institutions only, and solely if they pose a threat
Law would apply only to banks or companies that meet the definition of "nonbank financial" institution. Contrary to Beck's claim that Fox News would be a target of the financial reform law, companies affected by the legislation include banks and "nonbank financial" institutions that are "substantially engaged in activities in the United States that are financial in nature," not companies simply "saying" things that are "hurting the economy."
A nonbank financial company may be supervised only if found to "pose a threat to the financial stability" of U.S. According to Section 113 of the law, the Financial Stability Oversight Council -- made up of financial experts -- "may determine that a U.S. nonbank financial company shall be supervised by the Board of Governors and shall be subject to prudential standards, in accordance with this title, if the Council determines that material financial distress at the U.S. nonbank financial company would pose a threat to the financial stability of the United States." The law further states that before determining whether to supervise a nonbank financial company, the council must consider:
(A) the degree of leverage of the company;
(B) the amount and nature of the financial assets of the company;
(C) the amount and types of the liabilities of the company, including the degree of reliance on short-term funding;
(D) the extent and types of the off-balance-sheet exposures of the company;
(E) the extent and types of the transactions and relationships of the company with other significant nonbank financial companies and significant bank holding companies;
(F) the importance of the company as a source of credit for households, businesses, and State and local governments and as a source of liquidity for the United States financial system.
Decision to regulate nonbank financial institutions must be re-evaluated annually, and the company may contest being subject to regulation. The law also requires the council to re-evaluate, "not less frequently than annually," each determination made "with respect to each nonbank financial company" and rescind the authority to regulate that company if the council determines the organization "no longer meets the standards" for regulation. Further, a company "may request, in writing, an opportunity for a written or oral hearing before the Council to contest the proposed determination" that it is subject to regulation. After a final determination, the institution may "bring an action in the United States District Court ... for an order requiring that the final determination be rescinded, and the court shall, upon review, dismiss such action or direct the final determination to be rescinded," if the determination made was "arbitrary and capricious."
Company must pose "a grave threat to the financial stability of the United States" to be required to divest holdings. The law also states that at least two-thirds of the Board of Governors must agree that a company "poses a grave threat to the financial stability of the United States" and determine that terminating risky activities is "inadequate to mitigate a threat the financial stability of the United States," before requiring the company to "sell or otherwise transfer assets or off-balance-sheet items to unaffiliated entities."
Law designed to regulate "companies like AIG." In the bill's summary, the Senate Banking Committee wrote that the provision authorizing the regulation of nonbank financial companies was designed to regulate financial companies like AIG: "With this provision the next AIG would be regulated by the Federal Reserve."
Government only authorized to break up companies "as a last resort." The committee further wrote that the Federal Reserve will require a company do divest some of its holdings "only as a last resort."