One Paragraph on the Financial Reform Bill

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.

17 thoughts on “One Paragraph on the Financial Reform Bill

  1. We’ve had a recession about 8-9 years since 1991. Each recession gets progressively worse. We’ve just propped up Wall Street after the GFC and the casino is going full tilt again. Congress is likely to revert back to the Republicans due to the populace being angry at the Democrats for passing dreadful amendments that are reforms in name only. So, Congress will likely become even more dysfunctional as a result. The Obama Administration will become marginalized in this event, and no progress will be made by the Executive branch on any part of its remaining agenda. The Judicial branch is already disconnected from reality as witnessed by some of its latest rulings supporting the fiction of corporations as people. Unless another corporation screws up a public commons as bad as BP, the GOP will again have possession of all three branches of the Federal government by 2012. Then, they’ll prove their belief that government is the problem when Wall Street’s next bubble bursts around 2016 and finishes off what’s left of the United States of America and its economy, leaving corporations to build an even friendlier government and economy in its place to fill the power vacuum.

  2. Great (i.e. nasty) summary by Mike of Obama’s criminality. There’s probably plenty more we could list if anyone had the heart to go back over it.

    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.

    I don’t recall if Democratic cadres themselves said things like that, but that’s exactly what all the “progressives” from Krugman on down kept saying about the health racket bailout and now this monstrosity.

    But otherwise we’ll need serious campaign finance reform–or another financial crisis–before more significant reform can happen.

    There’s zero chance that “reform” can happen within this system. It’ll take collapse, or some radical bottom up change, and the latter will probably need help from the former.

    Part of the reason that’s true is this:

    Yes, I would vote for it if I had a vote. But it’s far from enough.

    The exact same thing you said about the viciously reactionary health racket atrocity. I’m sorry James, but that attitude’s a big part of the problem.

    If even a highly well-informed person with a sense of the public interest like you can’t “shift [his] popular opinion away from our decades-old infatuation” with a clearly criminal system, then why expect others can.

    One of the signs that a revolutionary situation is progressing is that elites who care about the integrity of the country turn away from the existing criminal system. Unfortunately, the whole process, after showing some brief sparks last year, is bogging down again.

    That, among other things, is why in the end the pain and destruction (imposed from the top, and by the eventual collapse from the top) will have to far more severe than it needed to be.

  3. It’s like health care reform, the non-fixes on the environment, and the perpetual war. All awful, and the political opposition is even worse than the ruling coalition. There’s nothing better on the horizon, and there probably won’t be for a decade or so, where change is likely to break out in the South, of all places.

    Meantime, consider what the health care mandates plus a continuing recession are going to look like.

  4. Yes. James Kwak and Mike Konczal are my favorites on the finance issues. Others could mention, but those 2 at the top. Janet Tavakoli would be a good choice to guest blog for Mr. Kwak while he is away.

    I have written Rachel Maddow an e-mail to get her to ask Mike Konczal on her show more regularly. Looks like I am going to have to go into my super annoying basterd mode and send Miss Maddow like 25 e-mails until she starts getting Konczal on her show more often.

    WHO’S WITH ME ON THIS!?!?!?!?!?! Who wants to annoy Rachel Maddow with MASS AMOUNTS of e-mail until she gets Mike Konczal on the program regularly?!?!?!?!?!!? Join the super annoying basterds’ e-mail campaign to get Mike Konczal on Rachel Maddow today!!!!! (No membership fees required, just enough time to send enough e-mails to where it feels like a nag to Rachel Maddow, and it becomes so annoying she gets Konczal on the show more regularly).

  5. I think Rachel is hot stuff. I don’t care who is on her show. I like watching and listing to what she says. A fellow can dream can’t he? This individual monologue diatribe platform is OK for you guys who are on the edge of what you are talking about, but for us new guys, well, it’s all too much (especially personal attacks). Are there any of you willing to discuss the money supply here in the states, or in the EU, and the affects that printing more money than there are trees, has on the value of the all mighty dollar. I don’t know, maybe there is a alternative platform, for those who are not as well schooled in economics, to get a better read of the financial situation here in the states. Any ideas gentlemen?

  6. It’s not meant to be a personal attack. I was actually trying to be self-deprecating, but obviously I failed.

    We’ve discussed Bernanke’s QE policy multiple times here. Obviously even professional economists have strongly diverging opinions there. As far as you educating yourself and becoming financially literate I’m afraid that’s a self-motivation issue.

    If you want to find bloggers who only care about deficit issues suddenly when a Democrat assumes the White House, well I’ll stay away from naming names, but you won’t have any probs there.

  7. “The Capitalists will sell us the rope with which we will hang them.” Vladimir Ilyich Lenin

    There were a number of Wall Street scions who most infamously associated themselves with Hitler’s financiers, and were more than willing to ride the National Socialist tide in Europe for their own benefit come what may, to the extent that they did not stop their activities in supporting the Reich until called out by the government through the Trading with the Enemy Act in 1944.

    Why bring that up now? Because that same sort of short term, greedy, amoral thinking is taking the US down a similar path with nations who, while the comparison with Hitler is inappropriate, are certainly no kindred spirits or friends of liberty.

    When the truth comes out, the perpetrators will claim ignorance, or victimization, when in fact they have been roundly selling out their country through the blind pursuit of crony capitalism, to the detriment of the people and their country.

    The real enemy is not Russia or China, although they are certainly inimical to freedom. The foulest enemy is a domestic predator class, famous for a character that ‘would sell their mother for an eighth,’ more than willing to sell the future of your grandchildren. They abuse the law, the media, and the integrity of justice to obtain their ends. They are without oath or honor.

    And when the time comes, they will prescribe draconian measures and proto-fascism, in an attempt to further consolidate their own personal power, and the benefits provided to themselves and their wealthy friends, under the excuse of the approach of danger from abroad.

    Geithner’s strategy, if you can call it that, reminds me of the shallow management pretense visible in many Wall Street firms. The Chinese and Russians see themselves in the ascendancy and, unlike the U.S., these nations have a vision of where they want to be a century from now. Americans just want to borrow more money.”

    What is disconcerting to me, is that the Wall Street financiers clearly have their eyes on the Pentagon budget: opaque, patriotically defensible, and huge. A currency war, with the Wall Street crowd providing tactics and weaponry and mercenaries to both the US and to its adversaries, might make the bonuses taken from the mortgage bubble look like pocket change by comparison. Its an old idea really, the basis of some legendary fortunes, adapted to the modern world. It produces nothing but misery, while transferring wealth from the many to the few.

    “Earth provides enough to satisfy every man’s need, but not every man’s greed.” Mohandas K. Ghandi

  8. Re: @ Russ____”The only thing that concerns me is the untimely metamorphus of future past’s which seems a given beyond logical probability…that we or others we be living amongst the “Dead zone’s” in the not too distance – just let us hope our leaders paralysis isn’t arthritic neurosis when the unthinkable impulse is flexed?”

  9. Re: @ Barbara____Ironically for the bad & good of humanity…the scions can grow in fetid soil as the ilk you reference with guilded arboring. Conversely as well…proliferation in wildly manicured nutured pods do the finest of blossoms seduce – but the crimsom cultivator has neither symbiotic preference for survival nor natural_deception_regarding equality? This is the reality man must struggle through – incarnated inception ,or just the reflection of the realm-elements hardwired within – this is only a “Test” ?

  10. I feel that we must be on an endless loop tape. The same crap keeps playing over and over again. And, as they say, if you keep doing the same things and expect different results, you’ve got to be insane. Well, we do (America) and we are, as can be so clearly shown. We’ve been through this same kind of thing so many times. Of course it hasn’t always been about finance, but it is about the growth of the absolute American Plutocracy. Until the common American citizen finds a way to wrest the government from the grips of the great oligarchies, we will see this continued, over and over. What caused the Gulf Oil Catastrophe? Easy answer to divine: the Great American Plutocracy at its best. Just like the financial crisis, just like terrorism, etc. And yet, the plutocrats lies and half truths persist because too many of us get caught up in what the plutocratic media tells us. Fiscal and financial reform is beginning to look like the gulf situation, in that the plutocrats are in control (both BP and the government are forbidding investigative journalism to find the real facts (there’s a news blackout being enforced on the Gulf). Oh, they are available, but one must be persistent to find them.

  11. again all these reasons that change didnt r superficial. we have a new system of kings & peasants in the form of corporations. just read glen greenwald on the oil spill. the govt functioning as a protector & intermediary for the corps against the rabble. until that problem is eliminated, we will have the mess we have

  12. the sense that Health Insurance non reform and the Fin Reg bills will be “modified” later on is by far one of the great lies put forth to keep the “same old, same old.”

    i just wonder who really thinks or expects any changes to these “improvements” will actually happen. such non sequitors, if there were any. the only changes to these bills will be to gut them even more. the Savvy Businessmen, what Obama called Wall St., are not going to let mere “little people” stand in their way of “profits.” never have and wont start now.

    oh but i will be patiently waiting for the “upgrading” of health care, fin reg, oil drilling and other “reforms,” like i will be waiting for the Israelis to live in peace with the Palestinians. or that Obama is worthy of a Nobel Peace Prize for expanding the wars in Afpak. lol, though the reaction from the right was worth watching the hypocrisy of our “fierce advocate for Peace.”

    Trust me!!!!

  13. Barbara, “The foulest enemy is a domestic predator class, famous for a character that ‘would sell their mother for an eighth,’ more than willing to sell the future of your grandchildren. They abuse the law, the media, and the integrity of justice to obtain their ends. They are without oath or honor.”

    Right, hooliganism and nihilism. Job security.

    I’m out of options as far as choices go – what to get out of bed in the morning to go do that is NOT, itself, WRONG

    or being done wrong so that wrong, itself, gains all the profit.

    Wait for the plutocrats to permit a classier predator class (Obambi Version 2.0) to get in there and wipe out the hooligan predators who were useful as a killing force in the transfer of wealth, but useless in providing the services for the new level of “luxury” that the plutocrats believe they have the “right” to buy now?

    In the meantime, we all know that the Gulf of Mexico has an “incurable” verdict, now we get to watch (and gather real data?) the slow motion death. Taking care of a beloved cancer patient dying over 2-5 years leaves a mark on a person every bit as damaging, in a different way, maybe, as coming back from a bloody killing war – real time traumatic syndrome versus post traumatic syndrome…what kind of “positive” life style can provide a balance?

    The predatory class is lucky to have no conscious and no “soul” – maybe that is the ultimate requirement in the “survival of the fittest” checklist and that’s why they “thrive” in the GLOBAL world disorder…?

    Maybe just need to find a way to take out the daily predatory in a way that amuses myself – find some dark ego trait – holier than thou works great for a lot of intellectuals :-) – telemarketers looking to “help” you with your “credit debt” and “mortgage rate” and “health insurance” and IRS debt and unemployment do quote from that “bible” book…hmmmm, dueling quotes out of context…?

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