Few rules govern how nations can borrow the money they need for expenses like the military and health care. The market for sovereign debt — the Wall Street term for loans to governments — is as unfettered as it is vast.

“If a government wants to cheat, it can cheat,” said Garry Schinasi, a veteran of theInternational Monetary Fund’s capital markets surveillance unit, which monitors vulnerability in global capital markets.

Representative Barney Frank and Senator Chris Dodd, Democrats of Massachusetts and Connecticut, respectively, are working on massive new legislation that will serious overhaul how our financial markets are needed.

On the surface, many people won’t object, especially after the turmoil we’ve been through over the last year, but if you dig a little deeper, you’ll see what the problem is.

Essentially, we’re going to give the federal government  TARP 4 Ever. In other words, dramatic, game-changing regulation and resuscitation of financial institutions banks could become the every day norm in America.

Resources

• Bloomberg | U.S. Rules Revamp Gains as Frank Sets Vote, Senate Bill Readied
• WSJ | Clash Looms on Banks
• WSJ | Bank Crackdown Draws Criticism
• Marketwatch | Critics take Frank ‘too-big-to-fail’ bill to task