Financial Reform: Politics and Policy Implications

HOWARD MEGDAL: The New York Times rundown of the Financial Reform bill talks about the political risks associated with the bill, lumping it in with health care reform.

Don’t you believe it. The only ones hurt by this bill are the malefactors of great wealth on Wall Street (note: this is not everyone on Wall Street or close to it, to be clear), and this is a political winner.

Every day from now until November, Democrats who voted for the bill get to point out that they passed a bill to try and fundamentally change the regulatory structure that produced the economic crash of 2008. And the argument against? That government is doing too much by trying to make sure what happened in 2008 doesn’t happen again.

The latter demands a short memory for voters. A very short memory. 50 First Dates level of short memory.

As an added bonus, every Democrat who supported the bill now can put an opponent on the record- did you support this reform? Or did you prefer to side with Wall Street? Obviously, deciding whether or not to support legislation is never that simple (though for some who opposed the bill, it surely was).

But 30-second ads are.

This isn’t health care reform, which will improve the lives of millions, but has a ton of moving parts that directly affect people in the short and medium-term. Financial reform will be an unseen hand- but the idea that when voters tune into the 2010 race, they’ll flock to the candidates who didn’t want to fix what happened in 2008 is, to this observer, laughable.

There are many other factors that will play a part on determining controll of Congress this November. But it would be a mistake to think this does anything other than help Democrats make the case that they are part of the solution, not part of the problem.

JESSICA BADER: While I mostly agree with Howard on the political impact of the bill (John Boehner’s call for repeal is the sort of thing that makes political sense only if one defines the GOP’s goal as “making Robert Gibbs look silly for stating that Republicans have a chance of winning the House of Representatives”), what interests me most is where progressives go from here, both on this bill and other elements of the Obama agenda.

In the early stages of the debate over financial reform, the Consumer Financial Protection Bureau was seen as the financial-sector equivalent of the public option – a huge area of focus for progressives that would be an obvious casualty of bipartisan compromise.  Yet things played out differently than they did with healthcare reform, with the CFPB remaining intact as President Obama prepares to sign the bill. Yet there is still some reason for a progressive to be disappointed – car dealers are exempt from CFPB regulation, the bill doesn’t break up big banks, and the concessions made to win over Scott Brown weaken the Volcker Rule.

While I am disappointed about those flaws in the bill, I can see the forest for the trees and recognize that this is a sweeping change for the better from the current state of financial regulation. This is why I’m annoyed that Russ Feingold opposed the bill and joined the Republican attempt to filibuster it. (That Feingold’s opposition came from a different direction than the other Senators who voted against cloture is largely irrelevant; what matters is that his opposition to the bill, much like Dennis Kucinich’s initial opposition to healthcare reform, gave the bill’s more conservative supporters more leverage to nudge the final product to the right.)

I also recognize that while the fight to make the bill a law has been won, the battle is far from over. The bill calls for many new regulations, and keeping an eye on whether these regulations are strong or weak is going to be hugely important. The same concept applies to healthcare reform, where (to give one example currently in the news) the Department of Health and Human Services is determining what services count as preventive care that insurers must cover without co-pays and a heated debate about covering birth control pills is taking shape. There is also the extremely likely possibility that these laws will be amended by a future Congress – it’s not hard to imagine auto dealers one day being regulated by the CFPB if outrage over their predatory lending (particularly the impact it has on military families) overtakes their political influence, and if Democrats hold on to the House I wouldn’t be surprised at all if a public option becomes law by the time the exchanges are up and running in 2014.

I find myself agreeing with much of Michael Tomasky’s recent essay on the history of progressive change and contemporary disappointment. I’ve previously outlined my philosophy of political negotiation as “take what you can get, but only after fighting like hell to narrow the gap between the world as it is and the world as you’d like it to be,” which is why I supported both healthcare reform and financial regulatory reform even though I didn’t like some of the compromises made along the way. The natural extension of that philosophy is “keep on fighting once the big battle of laying the groundwork is out of the way.” As a progressive who doesn’t see this as a time to dance in the end zone and declare total victory or throw my hands up in despair and lament impure dealmaking, I know that I will be encouraging my elected officials to keep moving in what I see as the right direction on these issues as the fights move to more obscure venues. There isn’t – or at least there shouldn’t be –  a contradiction between celebrating how far we’ve come while recognizing how far we’ve yet to go.

Tags: Barack Obama, Congress, election 2010, financial reform

This entry was posted on Friday, July 16th, 2010 at 2:00 am and is filed under News & Politics. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.