By James Kwak
From Mike Konczal:
“Examples? Off the top of my head, ones with a paper trail: [Treasury] fought the Collins amendment for quality of bank capital, fought leverage requirements like a 15-to-1 cap, fought prefunding the resolution mechanism, fought Section 716 spinning out swap desks, removed foreign exchange swaps and introduced end user exemption from derivative language between the Obama white paper and the House Bill, believed they could have gotten the SAFE Banking Amendment to break up the banks but didn’t try, pushed against the full Audit the Fed and encouraged the Scott Brown deal.”
(By the way, if you’re missing your financial commentary fix during my self-imposed hiatus, I recommend Mike’s blog highly–not that that’s news to anyone anymore.)
Yes, I would vote for it if I had a vote. But it’s far from enough. I believe what Rob Johnson says (quoted in Konczal’s post):
“This is the first act of a many act play. Finance was too large in proportion to our economy. It is still too large, and our dysfunctional political system that aided and abetted the growth of the financial sector over the last 20 years cannot be expected to turn on a dime and enact profound and needed change. That agenda is still ahead. This first round was not the whole fight. It was the wake-up call and the beginning of the fight. Rest up and get ready. There is so much more to do.”
Except that I’m not sure if there will be more acts. The incentive for the Republicans is to trash the bill for political purposes but then do nothing significant about it if and when they come to power. (It’s easier politically to rail against government bureaucracy in general than to actually, say, weaken consumer protection.) The incentive for the Democrats is to declare victory; as Barney Frank might have said, you don’t win elections by saying the bill you passed was not very good and you want to be reelected so you can make it better. There is some reasonably small chance that over the next decade we will get a shift in popular opinion away from our decades-old infatuation with finance and our willingness to excuse anything by saying it is good for economic growth (even if it isn’t). But otherwise we’ll need serious campaign finance reform–or another financial crisis–before more significant reform can happen.