The proposed bill passed the House without a single Republican vote, like most bills these days. Democrats are urging Senate Banking Committee chairman Chris Dodd to craft a bipartisan bill, but just like I predicted, there’s just no way that will ever happen. Here’s what the Boston Globe says about a “key” Republican figure working on the bill:
One of the key figures to a potential compromise is Senator Judd Gregg, a New Hampshire Republican who earlier this year accepted - and then rejected - President Obama’s nomination to be Commerce Secretary.
Gregg said in an interview that the House measure on financial regulation is among the worst he has seen. He called elements of the House bill wacky and socialist, citing provisions that would enable the government to break up companies deemed too big to fail, and to create a Consumer Financial Protection Agency.
That really doesn’t bode well for enhancing our regulation of the finance industry, does it? Creating an agency to protect Americans from out-of-control banks is “socialist?” Let’s face it — within the next ten years, we’ll have the makings of another bubble, and all of the “irrational exuberance” that brings. This time, wouldn’t it be nice to have someone out there who can stop the banks before they start offering new products that will seriously hurt our economy in the long run?
First, the current Republican Party will self destruct before it will ever willfully engage in bipartisanship. We can move past that question now.
Second, regulation will progress not for ideological reasons but for practical reasons. We will have another year or two of economic hardship that will keep the electorate acutely aware of this issue. That will extend the window of opportunity far enough out to allow us to argue for and achieve real reform.
Finally, the point you did not raise but which drives Right Wing Republican intransigence is the politics of 2010. They believe they have found the shortcut to the lush green valley of victory next fall. Let them go. You can't save them from their own foolishness. With the leadership they have chosen, they will be stranded up there in the high mountain pass and by spring thaw the Boehner Party will have eaten most of its own.
Ron's final paragraph is right on. This is all very calculated. The GOP believes that by being on the other side of every vote, and then by talking about how bad those bills were, they will have the best chance in 2010. Election is only 10 1/2 months away — perhaps they are right.
Creating an agency to protect Americans from out-of-control banks is “socialist?”
Your statement about creating AN aency leads one to believe that there currently are none. There are already 4 agencies that regulate financial institutions, FDIC, OTS, OCC and the Federal Reserve plus every state has a banking regulatory agency as well. Most are regulated by only one of these agencies but some are co-regulated by the FDIC and the state examiners.
Commercial and community banking, not to be confused with investment banking is one of the MOST regulated industries we have. The FAA may be the only one I can think of that doesn't have to check with someone as often as banks do to go to the bathroom. Do you ever wonder why all banks seem the same, why they all offer essentially the same products. It's not for a lack of creativity, it's because their product development and service are pushed into very small boxes in which to operate.
Question:
If this the fiasco of the past year in the financial world was all caused by the deregulation of the Bush regime, then why not simply put those regulations back in place? Do we really need to create a brand new agency to do this?
Good idea. If the Banking Act of 1933 (also known as Glass-Steagall) were still in place, we wouldn't be in the economic mess we are now. I've often wondered why no government officials are pushing for its restoration. I believe there are two main reasons. One is the widespread belief that anything 76 years old cannot be relevant to the modern era. Even candidate Obama said this. Second, when President Obama had to face the financial crisis, he found that there is no set of financial talent that both understands Wall Street and regulation; meaningful regulation hasn't been part of the modern financial career experience. Thus Geithner as Secretary of the Treasury.
Exactly, DtM. It's a no-brainer.
As an aside, Jeff, I thought that was a clever title on this post.
Comment continued …
The banking crisis had nothing to do with charging too many overdraft fees or too high of interest on credit cards. It happened because banks like to take real estate as collateral on loans. It is generally the safest form of lending. The ease of access to credit to purchase a home, thank you CRA, Fannie, Freddie, Dodd and Frank led to a housing bubble, with prices pushed artificially too high. This included real estate developments and condo projects. The bubble burst.
So the banking industry is now in crisis. While the government bails them out with one hand, they slap them upside the head with the other through regulatory reform. If you want businesses to survive and lend money and pay interest on your deposits, you don't make their cost of doing business go up. The government has done this with both the banking industry and auto industry through their bailouts. Banks will be forced to once again make "community fashionable" loans and auto makers will be required to make only hybrids, smart cars and mopeds. Anytime the government tinkers with private business, it is a DISASTER.
Whats your point? Should we not have bailed the banks out? Should we not be slapping them upside the head? Should we get rid of all of the regulatory apparatus, or some of it, or none of it? Is everything the government does a disaster or do they sometimes get some things right? Are the auto makers really being forced to make mopeds now? I have been seeing a lot of ads on the TV lately for the newest Cadillac crossover SUV. I thought the government took over GM in Obama's bid to be King of the World. If the auto makers are being forced to make mopeds and smart cars, why is GM advertising Caddilacs?
An energy and climate change bill will also be fun for them to obstuct in the senate, though I was surprised to see that the house bill passed back in June with 219 votes included 8 from GOP reps.