Morris: Financial Reform Will Trigger Wall St. 'Terror'

Fox News commentator and bestselling author Dick Morris tells Newsmax that a provision in the financial regulatory reform bill now under Senate consideration could usher in a "reign of terror" in corporate boardrooms around the country.

The legislation is supposed to help avoid a repeat of the September 2008 banking collapse, which nearly sank the economy. Twenty-eight Democrats and every Republican opposed the version of the bill passed by the House.

Editors Note: See the Newsmax video interview below

According to Morris, its proposals to cure what ails the financial system could be worse than the disease.

The reason: One provision gives the Secretary of the Treasury authority to seize any business deemed too big to fail, if it faces potential insolvency.

"And once he seizes it," says Morris, "the bill gives him the power to fire the management, replace the board, sell off its divisions, and wipe out shareholder equity."

Morris explained the policy's unfortunate repercussions in an exclusive interview with Newsmax.TV's Ashley Martella: "I'm worried first of all that this is the opening to socialism. And secondly, that even if he doesn't take over businesses, that this power will induce a reign of terror that will stop businesses from giving to Republican candidates, stop businessmen from criticizing Barack Obama -- because if they say something nasty about him they can walk into their offices the next morning, and they won't be there anymore."

Morris concedes that some degree of financial-regulatory reform would be beneficial. But it is critical, he says, that the Secretary of Treasury not be granted such sweeping power in the Senate version.

Heritage Foundation senior analyst David C. John says the Secretary of the Treasury would have to meet certain conditions to invoke the clause, which would apply only to financial companies. But he says Heritage is very concerned because the bill grants "huge and almost open-ended grant of power to the regulators."

"The question is, can it be stopped?" Morris tells Newsmax. "That's going to be a tough fight, and we'll be working with the League of American Voters to try and stop it."

Morris also weighed in on the ongoing battle over ObamaCare. He said Republicans should participate in next week's summit with the president to hammer out a deal on healthcare reform, adding "and they should win the debate."

The best way to achieve that, Morris says, is to send the 16 GOP members of Congress who are physicians: "And they'd say, 'Look you may be president, we defer to you, but we know more about healthcare than you do, because we're doctors and you're not.' And that would be very, very effective and I think that would really strike a tremendous blow."

As for Democrats' threat to invoke the parliamentary procedure known as reconciliation to shove ObamaCare through Congress, Morris is skeptical it would work.

To use reconciliation, the House would simply approve the entire bill that the Senate passed, with the promise that the Senate would later modify specific parts of the bill the House finds objectionable. Doing so via reconciliation would require a simple majority of 51 votes, rather than the 60 votes required to cut off debate over new legislation.

"There are two problems with that," Morris tells Newsmax. "The first is you can only fix budget-related items through reconciliation, and that's only a portion of the issue.

"But the main problem is that, while I fully expect the liberals in the House will table their objections and vote for the Senate bill, and hope that they get some stuff back in reconciliation, I do not believe that the conservative Democrats in the House are going to vote for that bill any longer.

"I think these folks are terrified. Unless they all resign and aren't running for re-election -- that they're prepared to go to their graves gloriously, as opposed to ingloriously -- I think that they probably will not pass the Senate bill. [House Speaker Nancy Pelosi] may not be able to pass it in the House."

Other insights offered by Morris during the exclusive Newsmax interview:

• Morris says when Indiana Democratic Sen. Evan Bayh announced his retirement, because he was only leading Republican John Hostettler, a former congressman, by 3 percentage points. "And then Dan Coats, a former senator, who was elected twice as a U.S. Senator, got into the race," Morris says. "There were no published polls about Coats against Bayh. But I'm sure that Bayh took a poll. That would take about a week. And about a week after it was clear that Coats was going to get into the race, Bayh withdrew. So I'm sure that poll number showed him 20 points behind Coats, and he pulled out."
• If President Obama changes course and begins a sincere effort to work with the moderates of both parties, he can stop his downward slide in the polls. "But as long as he's pushing this left-wing agenda, his ratings are just going to go further and further down," Morris says.
• If former Wisconsin Gov. Tommy Thompson decides to challenge incumbent Democrat Sen. Russ Feingold, the Wisconsin Senate seat "is probably gone to Republicans." Polls show Thompson, who has not yet announced, leading Feingold.
• Morris repeated his recent assertion that Democrats will lose control of both houses of Congress in this year's midterm elections. To win in the House Republicans will have to defeat 25 Democratic incumbents, he says, adding, "But I'll be we knock off 50."
• Democratic Sen. Barbara Boxer of California is in serious trouble against challenger Carly Fiorina, the former Hewlett-Packard CEO. "When Boxer is leading Fiorina by 47 to 43," he says, "she in fact is trailing by 53 to 47," he says. "The undecided vote always goes against the incumbent. …If I ask you, 'Are you going to be married to the same lady next year?' and you tell me you're undecided, it doesn't augur well for your marriage."
• He predicts President Obama will try to get a scaled-down energy bill of primarily symbolic value through Congress, in place of the cap-and-trade measure currently stalled in the Senate.
• Some form of financial regulation reform will probably pass the Senate, he says.