Of Financial Reform Promises and Too-Big-to-Fail Firms

One of the many astonishing things about the Obama Administration’s financial regulatory legislation is that it promises so much and delivers so little of what it promises. In fact, in most cases it delivers the opposite of what it promises. Seemingly, the Administration knows what the American people want, so it uses promises of delivering what the people want and what the nation needs in order to enact changes that most Americans will neither want nor like.

As Senators and congressmen prepared to return to their states and districts the Administration published a list of “Top Ten Things You Should Know About Financial Reform.” Presumably this would serve as a guide to politicians giving their Memorial Day stump speeches. I heard one Democrat congressman at the Memorial Day ceremonies in Waterloo, New York. Neither the list nor the legislation found its way into his remarks. Good thing for the congressman, because the legislation as currently written fails on all ten of the “Things” that the Administration paperwork boasts that it delivers.

Let us examine Thing 1:

1) End of Too-Big-To-Fail: If a big financial firm is failing, it will have only one fate: liquidation. There will be no taxpayer funded bailout. Instead, regulators will have the ability to shut down and break apart failing financial firms in a safe, orderly way—without putting the rest of the financial system at risk, and without asking the taxpayers to pay a dime.

Part of that Administration statement is true, but only part of it, and not the most important part. The legislation would provide regulators with the ability to shut down and break apart failing financial firms. Regulators already have that authority today and have been exercising it weekly for the past two years to close down failed banks “without putting the rest of the financial system at risk, and without asking the taxpayers to pay a dime.” Failed non-bank firms have been closed down through bankruptcy proceedings—again, “without putting the rest of the financial system at risk, and without asking the taxpayers to pay a dime.”

The risk to the rest of the financial system and the demand for taxpayer bailouts have all come in the past few years as the federal government has gotten involved to prop up firms that the federal government did not want to fail. Prior to the recent financial crisis, too-big-to-fail was a theory. Treasury Secretary Paulson made it official policy and practice, which policies and practices have been officially approved and adopted by the new Administration.

The new financial regulatory legislation—even while making it easier for financial regulators to break up and unwind failing financial firms—would also give to regulators legal authority to bail them out, prop them up, and have them born again as clean firms, free of the financial encumbrances of all of their sins of the past. In very real and important ways the legislation would take the theory of too-big-to-fail, turned into official practice by the Paulson Treasury Department, and make it the law of the land.

There are several ways that the legislation would provide this service. One important tool is the new explicit ability of the FDIC (which would become the agency for handling not just failing banks but any failing firm that government leaders considered important enough for the FDIC’s care) to treat the investors in a failing firm differently. The FDIC would be explicitly authorized to protect some investors and not protect others, giving special attention to the customers of a firm and those who have lent money to the firm. Shareholders are supposed to be wiped out and the leaders of the firm fired, but the bondholders and counterparties doing business could be protected.

If this sounds familiar, this is exactly how the federal government has been treating housing giants Fannie Mae and Freddie Mac. When the government took them over in late 2008, shareholders were nearly but not entirely wiped out, leaders were let go, but all of the bondholders, counterparties, and investors in debt securities of Fannie and Freddie became 100% protected by the federal government and remain so today. Several other participants in the financial system were “put at risk,” the government’s exercise of discretion to pick winners and losers precipitating the failure of several banks that were holding preferred shares of Fannie and Freddie that the government chose not to protect. The taxpayer has not been protected either, the Treasury deciding last Christmas Eve to allow Fannie and Freddie to receive unlimited federal support, already totaling hundreds of billions of dollars.

Fannie and Freddie are government sponsored enterprises (GSEs). The government subsidy programs for these GSEs would be the new model available for any firm designated as systemically significant by the federal government under this legislation. That is to say, that under this legislation, in place of two GSEs we would have potentially dozens.

There is a price for this attention. Whether a firm wants it or not, under this new legislation, if enacted, any firm could be given the GSE treatment. Once the government considered a firm to be “systemically” important it could be told in as much detail as the government leaders considered necessary exactly how to run its business. No part of the business of the firm would be exempt from the government’s reach. The federal government would become the effective partner of that firm. And as former Congressman Dick Armey once said, when you partner with government, the government is never the junior partner.

Now, ask yourself this real-world question: as senior partner, would the government ever let any of its partner financial firms fail? If, as is the case with Fannie and Freddie, by following government mandates the firm got so deep in the red that action became unavoidable, the federal government would be able to use another powerful tool in the proposed new law: the authority to create a “bridge bank." As the government has been doing with Fannie and Freddie—and as many suspect the government will do to “fix” Fannie and Freddie—government officials could take over the operations of the firm and use this bridge bank authority to protect whichever investors they wished and make others (not leaving out the taxpayer) suffer loss. Through a legal and financial “baptism” administered by the federal high priests of finance all of the sins of the failing firm could be gathered together into one “bad bank” and all of the remaining operations of the firm could emerge as a new firm washed completely clean of bad debts and uncollectible assets. The new firm could then be offered up again—either with the same name or a new one—to investors. Of course, the federal government would likely remain as senior partner, but this would give comfort to investors who, like investors in Fannie and Freddie, were looking for a place to put their money where the government would be expected to protect those investments.

Ending too-big-to-fail? In the Administration proposal too-big-to-fail becomes the law of the land. The Administration’s number one selling point for financial legislation is a very good reason to oppose its bill.

Of Financial Safety and Lost Liberty

Americans are about to lose more of their liberty, in a very big way. Like the oil leaking away from the deep well in the Gulf of Mexico, American financial liberty will be steadily draining off with few ideas on how to stop the leaking once it has begun.

First the housing markets panicked, then the Paulson Treasury panicked, and then the financial markets panicked. Now panic has hit Congress. Ignoring that the housing-financial crisis was set up and fomented by bad government regulatory programs, Congress is on the verge of enacting legislation that will give to government regulators authority to control any financial activity in the United States.

You may think that I am exaggerating a bit here, getting carried away by rhetoric. I wish that I were. Looking at the provisions of the legislation that the Senate is now debating and is scheduled to pass in the near future, I cannot think of a single financial transaction that government agencies would not be able to control. By control, I mean set rules as to how the transaction would be structured, to whom it could be offered, by whom it could be offered, how it could be advertised, how it would be priced, or even whether it could be offered at all.

Let us consider a simple financial service: a home equity line of credit, or HELOC. With a HELOC a customer can borrow money from the bank up to the amount of equity that the customer has in his house. The attractiveness of the HELOC is that you do not have to sell your house in order to use the equity in it to help pay for college, fund needed remodeling, or even start a small business. With the loan backed by the equity in the house, the borrower gets a far lower interest rate than he would without that collateral.

The legislation would create a new, totally independent federal bureau of consumer regulation. This new bureau—headed by a one person consumer czar endowed with power that would make an old Russian despot jealous—could determine, for example, that it would be “unfair” or “abusive” if the amount of money that a customer could borrow under a HELOC were reduced by the bank when the value of the customer’s house declined. I am not making this up. At a recent Federal Reserve meeting self-appointed consumer advocates, who would dominate the new bureau, complained that banks during the housing bust were lowering HELOC amounts for no good reason other than that home prices declined, neglecting that what makes a HELOC affordable is that it is backed by the value of the house. The value of the house goes down, so must the value of the collateral and the loan amount secured by the collateral. The law would not require, however, that the new consumer bureau be guided by common sense.

Other provisions of the proposed law would allow government agencies to break up any company in America, or make it set aside any reserves, or give up any line of business—and allow the agencies to play favorites by acting one way with one company and very differently with another—as long as the agencies claimed that their actions were appropriate to deal with systemic risks. The agencies would be the sole judges of what makes for a systemic risk. Or, to look at the authority another way, the federal financial agencies would be able to define what they consider to be “safe” financial conduct and effectively ban everything else, and steer individuals and businesses into government-identified safe financial activity.

In case the recent financial panics tempt you to think that all of this is a good idea, remember that we have tried this all before, and very recently. The example—housing—is staring us in the face. Maybe policymakers in Washington are too close to it all to notice.

In the housing fiasco, the government determined that mortgages were very safe (as demonstrated by Federal Housing Administration programs that allow homeowners to have a negative equity position on day one of their new government-guaranteed mortgages), that investing in mortgages was safe (hence the creation of government-sponsored Fannie Mae and Freddie Mac, to encourage investment in mortgage securities), that packaging mortgage securities was safe (as demonstrated by AAA ratings for packages of securities, awarded by credit rating agencies that were franchised by the Securities and Exchange Commission), and that housing assets on bank balance sheets were safe and worthy of incentives by regulatory standards that allowed banks to hold relatively little capital for their mortgage loans.

So, given how well the government identified safe financial activity in the housing markets we can expect the government officials to be equally mistaken in identifying other forms of safe financial activity. Even as I write this, government officials are working on new plans to establish rules to require banks to stock up on various types of government debt. These rules are based upon the near-sighted assumption that government debt is safe—ignoring the rising flood of Greek government debt, held back only temporarily by sandbags filled with fiat money from other European governments.

On the wall in my family room I have a framed $500 government bond. Only one coupon from it has been clipped, a semiannual payment for $15 in interest. The next coupon is payable on July 1, 1865, by the government of the Confederate States of America. That coupon and all the rest of the coupons through 1894 remain unredeemed. The proposal by Congress to exchange American financial freedom for the wisdom of government to identify safe financial activity has the crackle of Confederate money.

Of Politics and Principles

The debate and development of public policy in the greatest republic in history has been my career. Discerning between good and bad ideas, detecting valid and erroneous arguments, is part of my daily job. The success of a republic, however, requires that all citizens have competence in judging right and wrong in the debate of public issues. All do not have to be experts in all the details of every issue for a republic to work, but they do need to be able to judge enough to know to whom they should entrust the duty to represent them and attend to the details of governance—and to know when to withdraw that trust.

With public debate becoming increasingly confusing but also, apparently, increasingly prone to slogan and devoid of substance, with emotion seeming to take up more space than information, with error and deception playing a progressively more prominent part in discourse, how do citizens whose careers are more focused on producing goods and services and the things that make an economy work figure out who is right and who is wrong? Without leaving their day jobs for politics, how do they choose the right people whose lawmaking can dramatically affect everyone else’s day jobs, as well as their hearth, home, and health?

I believe that the answer is that every citizen of the Great Republic, as Winston Churchill called the United States, needs to be familiar with and dedicated to the founding principles of the Republic. The consideration of every public issue should be based upon an appeal to this foundation. That approach may not resolve every issue, but it will ensure that we do not stray very far into error. In fact, for most of the key issues of today an appeal to the founding principles would quickly disperse the foggy talk that makes up so much of contemporary public debate.

Those founding principles are embedded in our Constitution, but they are perhaps most clearly presented in the Declaration of Independence. I present a few examples of founding principles that would serve as reliable guides in considering such issues as healthcare, financial regulation, and taxation and public spending.

The Declaration begins by invoking “the Laws of Nature and of Nature’s God.” Our concept of government rests upon the idea of truth and laws that are as immutable as God Himself. Trust that those who say that truth is relative and law is founded on whatever man or Congress or the Supreme Court want it to be are leading you far astray, regardless of how attractive a ribbon they put around their poisonous policy packages. If law is relative, then government is a mere matter of the will of whoever can sway the crowd today. There is no protection for the minority—and all will find themselves in a minority of some kind whose rights need protecting.

The Declaration, in words that hopefully all Americans still find familiar, proclaims the “self-evident” truths that, “all men are created equal, that they are endowed by their Creator with certain unalienable Rights . . .” Among those immutable truths on which our system of government was founded is the focus on the individual, that the individual has worth, has importance, has rights that cannot be taken away. These rights can be usurped by tyrants—and at the time when the Declaration was written and approved by the representatives of the new nation nearly all of mankind labored under tyrannies—but that does not eliminate these rights, it only violates them. Our nation was created to protect the rights of the individual. Reject politicians whose formulas are invoked to violate your individual rights, especially when they justify the taking of individual rights by an appeal to benefiting the group. Remember, at the head of every group is a leadership who in fact enjoys and wields the “rights” of the “group” as the spokesmen for the group. They derive their power, vampire like, from the blood of the members of the group, from individuals whose rights are violated to empower the group leadership.

In direct relationship to these individual rights, the Declaration explains, “That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed . . .” Withhold your consent from those who would seek to govern with plans that rather than protect your rights would limit your rights. Resist those whose plans assert that government should be given the decision over your daily choices. Resist those who assert that all must be “regulated” and who believe that finding that something “is not regulated” is a justification to regulate it, that is, to impose government decision-making over the power of your individual decisions. Your right to choose is the reason the government was created, to protect your individual rights, not usurp them.

On reflection, it is all too easy to find regulations and programs in our government and laws that are inconsistent with the Declaration and the founding principles of our government. The immutable rights remain, however they may be currently violated. That should alert us to the danger in which we live, but it should not be cause for despair. Rather we should be motivated, as were our nation’s founders, to reassert the principles on which our nation was founded. The tools for doing so, embedded in our Constitution, are still available to us.

Of Geography and the God of All the Earth

A colleague this past week had a religious conversation in which an old academic chestnut was brought up. This was the one that begins with the undiscerning observation that the different religions are in fact pretty much all the same. Step two in the argument is that all religions basically teach the same thing, such as to be a decent person and kind to your neighbors. Step three in the argument is needed to explain why, then, if they all teach the same thing are there so many different religions. The third step is the assertion that the different religions are manifestations of different cultures or civilizations around the world. Judaism, so the argument goes, is the manifestation of an ancient culture from the area of Palestine, Christianity the religion of Europe and its colonies, Islam the religion of the Middle East, Hinduism the religion of India, and so on. The final step of the argument is that—and therefore—there is precious little in the way of “truth” in religion and certainly not enough to argue about.

No doubt you have heard the argument before, and as you consider it you very likely can see how thin of an argument it is. I have nearly always encountered it as a variety of argument intended to end rather than engage in conversation.

With regard to the first two parts of the argument, there certainly are similarities among religions, but it seems that the more knowledgeable one is about a particular religion the more prone he is to see how different it is from others. Religious converts are particularly good experts on differences in religion, the differences being powerful enough to motivate a change of beliefs and not infrequently a change in their entire way of life. The sameness tends to be seen more by those who are more casual about their religious knowledge.

As to the third and fourth elements of the argument, it is one thing to recognize geographic and cultural influences in religions and quite another to assert that the discovery of these influences means that the quest for religious truth is a waste of time and effort. To begin with, geography fails even as a superficial explanation for religious difference. How does it explain different religions that are embraced by large numbers in the same region. India is one very clear example, where several religions have tens of millions of adherents. It also poorly explains how Christianity, Judaism, and Islam have such close geographical ties that they have had and continue to have bitter disputes over the same sacred sites, most especially Jerusalem.

This is not to say that one cannot find original roots of particular religions in one place or another. After all, the religion had to start somewhere, with someone or some group living in some place on earth. From that place the particular religion spread to other places and people.

But now I present a different case. What of a religion that has its rising in two different locations, on two separate continents oceans apart? That is the case with the doctrine of Jesus Christ. With the testimony of the Holy Bible and The Book of Mormon taken together we have two witnesses—one from the Old World and one from the New World—that Jesus Christ is the Son of God and Savior of the world. No other religion can or does make that claim. Each volume of scripture is an ancient record of God’s dealings with His children, teaching the same plan of salvation through the atoning sacrifice of Jesus Christ and His resurrection from the dead. In the writing of these records there was no comparing of notes between the separate series of authors, no communication other than through God and His Holy Spirit.

Whatever the geographical explanation of religion might claim, its claims fall to the ground in the case of Christianity. There truly is something different about the doctrine of Christ. It comes with the tangible testimony of dual volumes of scripture that proclaim with two voices from two hemispheres the single message that Jesus Christ is the God of the whole world and not just a part of it. As Christ explained to His disciples in ancient America,

Know ye not that there are more nations than one? Know ye not that I, the Lord your God, have created all men . . . ? Know ye not that the testimony of two nations is a witness unto you that I am God, that I remember one nation like unto another? Wherefore, I speak the same words unto one nation like unto another. (2 Nephi 29:7, 8)

Of Government Collusion and Market Discipline

There is a lot of noise and confusion about what caused the recent financial panic. The Obama Administration believes that the basic problem is that markets do not work right, people are too dumb to choose for themselves, and that regulatory agencies were not able or were unwilling to keep up with bank shenanigans. Their solution: more of the same, that is, create a variety of new government agencies and bureaus that have the authority to dictate and control any part of or player in the financial system, including control of financial customers large and small (look in the mirror for the definition of financial customer). This neglects the fact that government agencies were the most blameworthy in the recent financial panic. In fact, it is impossible to have a long, sustained economic recession or depression without government policies causing it. (I will save for another day how the policies of the Federal Reserve and the Franklin Roosevelt administration made sure that an economic downturn became a depression lasting for a decade.)

Let me address the first of these points in the Obama administration’s justification for taking over the financial system. First of all let us consider the markets. It is true that the markets did not perform right. That was because government rules, structures, and programs did not allow the markets to perform right. The government guarantees bank deposits, so depositors do not care very much how safe or sound a bank is. Government-sponsored enterprises (GSEs), like Fannie Mae and Freddie Mac, bundle up mortgages into securities that investors assume have little or no risk. The Securities and Exchange Commission (SEC) approves and controls the small number of credit rating agencies, and investors believe that these agencies are right when they give to a particular company or investment their highest credit rating (such as AAA), a rating that is thought to present little or no risk. The SEC has protected these agencies from competition and from market discipline for their errors while providing little in the way of regulatory discipline.

With those and other government protections in place the appearance of risk just about disappeared from the mortgage markets. Different investors have different appetites for risk. It was not the people hungry for high risk returns that fueled the housing bubble. Many of those with the weakest appetite for risk, seeking the safest investments, were drawn to the mortgage markets. In this government-manufactured atmosphere of little or no risk, many mortgage firms, increasingly non-bank mortgage firms, made it more and more possible for people to buy houses that they could not afford. Once the mortgage firm made the mortgage, regardless of the ability of the borrower to repay, the firm sold the mortgage to the GSEs, who sold it on to investors who poured trillions of dollars into what they thought was a safe haven. Then the mortgage firm went on to make more mortgages. Investors were shielded from asking whether the mortgages were any good, that is, whether the person buying the house could actually afford it.

That mispricing of the risk pulled more and more money into mortgages and real estate, driving prices up and up, pulling in more and more investors as the prices rose, until it was impossible to put one more Jack on the house of cards without it tumbling down. People panicked when “safe” investments turned out to be risky. Then the government started panicking, bailing out some firms and not others, changing the rules almost weekly, demanding hundreds of billions of dollars from taxpayers in order to pick financial winners and losers. Investors, not knowing where the government would turn next, panicked some more.

It was government interference in the market that failed, not the markets. Without all of the government camouflage, investors would have insisted on knowing that the mortgage borrowers could afford their houses before funding loans to buy them. Ask yourself this: would we have had the whole housing blow up if people who could not afford to buy houses were not given mortgages? Yet the Obama Administration, even today, is tripping over itself to find new ways to guarantee new mortgages, in many cases especially for people who cannot afford their houses. Where have all the subprime mortgages gone? They have gone to the Federal Housing Administration (FHA), where they have a government guaranty. (Watch what happens to the FHA house of cards in the coming months.) When will they every learn? Oh, when will they ever learn?

Giving more power to the kind of government agencies that helped create these problems hardly seems like the sensible answer. That is what the Obama Administration proposes, though. Instead of controlling the markets with more government interference and masking of risk, more bailouts for firms that should be allowed to fail, more power for some new government bureau to pick winners and losers and to tell people which financial products they can and cannot have, we should be exposing financial players more to market discipline. We should make it harder to hide risk and easier for investors to recognize the risks and allow the markets to charge higher prices for higher risks and lower prices for lower risks.

Market discipline has always been the quickest and surest regulator. It rewards the efficient provider of what the buyers in the market want, and it punishes the incompetent. Very importantly today, the market is stingy about bailouts.

Of Liberty and Barackracy

When President Barack Obama leaves office, he will leave Americans with less liberty than they had when he took office. Absorbing many liberties that Americans had, making decisions for Americans that they used to make for themselves, will be a vast array of new government agencies, the new Barackracy.

I chose the term “Barackracy” with care. It ends with a suffix similar to that in “democracy.” Democracy means rule or government by the people. Barackracy is similar to the well-known term, “bureaucracy.” That is not accidental. Bureaucracy was a pejorative term, coined in early modern times to criticize the French government, which had become by and large run buy unelected officials in government agencies, the bureaus. At the time, elective governments—and indeed, constitutions—in France would come and go with amazing frequency, but the bureaucracy and the bureaucrats who ran the operations of government would always be there and would carry on largely undisturbed. For much of what mattered in day-to-day life, France was ruled by the bureaus.

The bureaucracy helped to make France what it is today. More and more decisions over a wide range of matters in the ordinary lives of ordinary people were made by the bureaus. The Soviet Union learned from the French model and could probably not have been created without drawing upon that example. The Soviets expanded upon the French model, but the Soviets did not invent it. Even with the Soviet Union dissolved, the Russians are having a very difficult time establishing the liberties of the people, because the Russian bureaucracy survives at the core of the current Russian government.

When the United States was created we had no bureaucracy. In the early years of the Constitution we had only three departments of government, the State Department, the Treasury Department, and the War Department. These three departments focused on the three acknowledged purposes of the federal government, to conduct our international relations, provide for the common defense, and have a national system of revenues to pay for it all.

Instead of bureaucracy, we had liberty, protected for a time by a federal system of government that dispersed governmental power among the states and within a system of checks and balances. The founding fathers had already seen how government limited freedom and how government tended to grow if left unchecked.

Each order from a bureaucrat limits liberty. The decisions of bureaucrats, operating on behalf of the government, have the authority of law and occupy the field where individual decisions used to operate. And, unlike private decisions, the mandates of the bureaucracy are backed by force. Several decades ago Alan Greenspan described the power of bureaucratic decisions this way:

At the bottom of the endless pile of paper work which characterizes all regulation lies a gun.
(Alan Greenspan, “The Assault on Integrity,” in Ayn Rand, Capitalism: The Unknown Ideal, p.119)

At the core of each proposal by Barack Obama to change America lie several new government offices and agencies that arrogate to themselves the power to make decisions that so far have been made by the people themselves. In the Obama “Cap and Trade” plan designed to save us from global warming (or now, “climate change” since it is no longer clear whether the earth is getting warmer or colder) are various agencies that will decide how people can use energy, what they can buy, how their products are made, and what they pay for them. The healthcare legislation will have an unnumbered collection of new government agencies to decide who gets to buy health insurance and from whom, at what price, with what features, covering which illnesses, under which treatments. The proposed new Barackracy will include new agencies to determine what financial services can be offered to you, who can offer them, and on what terms. It will also decide which banks and other financial firms can survive and which ones should be bailed out. There are other plans, too.

In each case, liberty is replaced by government decisions, made by people who are never up for election, accountable to no one. The Senate sponsor of the financial Barackracy bill, Senator Chris Dodd, said that with a new financial consumer regulator it will no longer be necessary to go back to Congress for new consumer legislation—the new Barackracy will have that legislative power. What if you do not like what the new agency does? Or, just what if you would like to decide for yourself? That liberty would be gone.

In the days ahead the power of the Constitution created to preserve the liberties of the people will be tested. The surrendering of our nation—described by Abraham Lincoln as possessing a government “of the people, by the people, and for the people”— over to rule by the new Barackracy certainly seems to be inconsistent with both the spirit and the letter of the Constitution. We will look next to the courts to uphold the Constitution and the liberty it was established to protect.

Of Literary Classics and Scripture

I was sad when I read the last book by Jane Austen. Her use of the English language delighted me with each and every volume, combined with her subtle wit and charming dialogues. I wanted to read more, but there was no more.

I felt much the same way when I could find no more to read from the pen of J.R.R. Tolkien. His fantasy works are the models of the genre, combining beauty, with plot, with never-ending-inventiveness that is marvelously varied and yet always internally consistent. Moreover, he is a great story teller.

J.K. Rowling’s Harry Potter series demonstrates that mankind has not exhausted its ability to produce classic literature. The stories combine entertainment with depth of theme and timelessness of message—imbued with a magical charm. I loved the last book of the series, Harry Potter and the Deathly Hallows, even more than I loved the first, Harry Potter and the Sorcerer’s Stone. My only regret was that the series was over, done. I would be eager for more, if the quality could be maintained.

Aye, and there’s the rub. These authors are all too human. Either they die—as do we all—or the challenge of continually meeting the test of producing a classic becomes too daunting.

Is God subject to these same limitations? Certainly He does not die, but is the Author of the scriptures in danger of falling short of continuing to meet the high standards of light and inspiration that make the scriptures what they are? That is to say, will the Source of inspiration ever be less than eternally abundant? The answer to that is equally, no.

All of that being so, then why would any believer in God give any credence to assertions that the canon of scriptures is closed? Even more, why would any believer in God react with anything other than delight at the news that there is more of the word of God available.

That was certainly how I greeted the news of The Book of Mormon. Raised with a deep reverence for The Holy Bible, I was overjoyed to learn that there was even more scripture, more of the words of Christ and His prophets and apostles.

A belief in God must mean a belief in a living God, and if living, He must continue to do what He has always done, be a Creator, a Father, a Comforter, a Guide, and a Revealer of His will to His children.  Thus the Lord proclaims through His modern prophets and disciples,

We believe all that God has revealed, all that He does now reveal, and we believe that He will yet reveal many great and important things pertaining to the Kingdom of God. (Articles of Faith 9)

Our Heavenly Father has promised us more of His word. I can hardly wait for the next volume!