As Cheryl Wade noted yesterday, President Obama delivered his financial regulation reform speech near Wall Street touting a bill that just one week ago appeared stalled. The bill appears poised to move ahead on Monday as it was filed for cloture to begin debate on Capitol Hill. Just seven days ago, 41 Republican Senators sent a letter to Democratic Majority Leader Harry Reid promising to filibuster the proposed financial regulation. Today, many see financial reform as inevitable and happening quickly. The reason? External political pressure. The primary argument forwarded by the Republican Senators was that passing the bill would lead to “perpetual bailouts.” This particular talking point, purportedly taken explicitly from a “Words that Work” memo by Republican consultant Frank Luntz written before Senate financial reform was proposed, was too transparent and ridiculed throughout the media. Still, the cloture vote is a political risk as Senator Reid appears to be attempting to call the bluff of the 41 Senators who signed the filibuster letter.However, it appears that members of Congress are willing to work together towards a deal. Senator Blanche Lincoln, a conservative Democrat introduced tough derivative reform language. Republican Senator Bob Corker has signaled his willingness to deal and has said that he expects financial reform to receive 70 votes, rhetoric that is far more positive toward new regulation than that in the past. Senator Olympia Snowe, one of the few Republicans to vote for President Obama’s stimulus bill, has signaled that she would be willing to be the sole Republican to break a filibuster in favor of reform. The real reason behind this sudden change? Most likely the realization that standing for reform is more politically favorable than standing with Wall Street and its lobbyists.
It will be interesting to see whether debate begins on Monday or whether the 41 Republicans will make good on their filibuster threat.
ReplyDeleteI agree that it is a politically motivated move for Reid to call for cloture. Seems like Corker and Shelby continue to negotiate in good faith.
The real reason behind this sudden change ... realization that standing for reform is more politically favorable than standing with Wall Street and its lobbyists.
ReplyDeleteIt's always amusing when someone asserts that the Republicans are "standing with Wall Street", when the Democrats consistently receive nearly twice as much money from Wall Street firms than Republicans. Republicans are not against reform, they're against badly written reform that may result in the increased concentration of risk, as a result of favored status for TBTF firms, and endless taxpayer bailouts.
Democrats have passed one piece of major legislation after another without taking the time to read the legislation that they are enacting. Very few, if any, of them even understand the derivatives that they are regulating. The idea that all regulation, in and of itself, is good is just nonsense. The Republicans should use their filibuster position to slow this legislation down and examine it's provisions carefully to help ensure that it does not further the Democrats march down the road to crony capitalism. We do not need a repeat of the failed "stimulus" bill or the another travesty like the health care bill.
it is interesting how much politics and financials merge.
ReplyDeleteThe sad thing is many normal American who do not have the formal education that lawyers and accountants have, or the political knowledge of the process for that matter, are out of the loop and have only the major media networks such as Fox News and CNN to tell them who to blame for problems.
This has contributed in a big way tot he increased partisanship in Washington.
The talk of reform is great. But, I have not seen how the financial reform that has recently taken place in Congress has trickled down to the average citizen. Many banks were bailed out due in part to the numerous defaults of home loans. However, as a result of the bailout nothing has significantly trickled down to the average citizen. So, while the new trend on Capitol Hill is to preach reform, I suggest holding all of the political evangelist accountable for their words.
ReplyDeleteLook, I love America, and as a son of immigrants and as someone who been, lived in, and who has family in other developed and less developed nations, I think it is important to say that this is one of the few countries in the world that a person can make and lose fortune based on his intelligence, commitment to hard work, and a little luck. To often in the history of financial reform or financial policy there is a failure of effectiveness in curbing harmful situations. Why?
ReplyDeleteWell it might have something to do with the people that are making the laws and the financial policy. I would LOVE to see how many of our Congressman could answer simple questions about financial products. I think people might be shocked at the number. These claims of reform are nothing but a ploy to achieve poltical advantage. In India, a politician will tell a local village to cast their vote his way and he will make sure that they get electricity and running water. Just before the next election the the politician will have a light installed in the middle of the village. Then he will come back asking for the votes claiming that he did all he could but others in the legislature did not want to help. It seems our leaders have started to take tutorials from corrupt practices. It is time for a change.
If a politicain doesn't know how to swim he shouldn't claim that he can. Similarly, if a politician claims to know how to reform the financial industry he should take the time to put his explanation up for public scrutiny before he actually gets it passed. I urge people to cleanse Washington by voting everybody out. If a Democrat holds that office vote Republican or Independent and vice-versa. Scare the politicians. Remind them that they serve us and if they can't do simple things that are obviously needed (like some sort of financial reform whether it is more or less regulation so long as it is effective) that we will look for new employees. Also, I have not heard the cry for stiffer penalities for violations of laws that already exist. Why put somebody in a White Collar prison just because they weren't violent. Put those guys in the regular population and see if they find breaking the law is worth the risk. Give them life sentences. Do something.
It is obvious that there does need to be more comprehensive regulation of Wall Street after the collapse of the last few years. I agree with the second comment that reform is simply more politically favorable than standing with Wall Street but maybe that it not such a bad thing. Of course it could go too far and have a chilling effect on the markets but something must be done to prevent future financial meltdowns.
ReplyDelete- Jonathan Haskell