The Strange Politics of FinReg

Kevin Drum writes:

Brutal partisan brawling over things like healthcare reform and climate change legislation was (and is) entirely unsurprising. [. . .] Financial reform is different. Politically, the obvious play for both parties is to outbid each other in efforts to rein in Wall Street, which practically everyone in America hates. But even though this would be an enormous vote getter, neither party is doing it. Democrats are offering up some mild reforms that would modify the playing a field a bit but not really fundamentally change anything. Republicans won't even go that far.

This is not as surprising as Kevin would have it. Money is all important in politics. And much of the money in politics comes from Wall Street. This is where the promise of Obama changing politics was so obviously false. In any event, the era of Democrats running against Wall Street are long over. A relic of the era of FDR:

Speaking for me only

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    When the Democrats (5.00 / 1) (#3)
    by jimakaPPJ on Mon Apr 19, 2010 at 09:05:31 AM EST
    bring Freddie and Fannie to the party they can blame the evileeee Republicans.

    Of course they won't, just as Barney Franks defended them in 1993.

    Yep, or the repeal of Glass Steagall (none / 0) (#5)
    by Buckeye on Mon Apr 19, 2010 at 09:11:12 AM EST
    and complete deregulation of derivatives was signed into law by Bill Clinton.

    Nobody's hands are clean on this one.  That is the problem.


    If you can't get beyond your ego (none / 0) (#8)
    by Militarytracy on Mon Apr 19, 2010 at 09:26:46 AM EST
    it can be a problem.  This was a wasted crisis in Rahm terms but he's so ponied up with Wall Street this wouldn't be a crisis he wants to do the right thing with either.  Nobody's hands are clean, but doing the right thing at this time can do amazing things for the people.  Nobody wants to do the right thing though and make the Titans mad.

    Digby recently pointed out former (none / 0) (#22)
    by oculus on Mon Apr 19, 2010 at 10:51:54 AM EST
    GOP Congressman Mike Oxley (of Sarbanes-Oxley) is now a lobbyist for NASDAQ.

    I need to do some digging (none / 0) (#25)
    by Militarytracy on Mon Apr 19, 2010 at 11:19:08 AM EST
    on that.  The people doing the propagandizing for the pro too big to fail policies seem to all be a part of the political oligarchy too.  And I have to ask myself that if he is lobbying for NASDAQ how he might also be attempting to get Social Security flowing into the NASDAQ as well.  That is my pet project, to keep track of everyone and anyone angling for that.

    Circulation of elites. (5.00 / 1) (#29)
    by jeffinalabama on Mon Apr 19, 2010 at 11:56:21 AM EST
    C. Wright Mills wrote about this in the 1950s. Darned if the elites didn't take it as a blueprint.

    Hard to find people in Big Government who don't have a background in Big Money/Business, or Big Military, whether having served or in the Defense Contractor side.

    Ther are a few outsiders, but only a few.


    And of course you don't have to (none / 0) (#31)
    by Militarytracy on Mon Apr 19, 2010 at 12:13:56 PM EST
    tell me about big military.  It isn't as if this household won't partake.  I do get a secret joy out of the fact though they my evil conservative bro in law who is so arrogant  and a real "kill them all" hero can't find anyone who can stand him enough to give him a ginormous big military civilian job right now.  His only hope for his dream job and wedging in was the Dubya military pigs years and those are over :)  Looks like he'll just have to stay with the Air Guard making pauper wages even though he graduated from the Academy....sniffle...sigh....how sad.

    What one must do is decide (none / 0) (#34)
    by jimakaPPJ on Mon Apr 19, 2010 at 04:28:49 PM EST
    which group represents your best interests.

    Sounds almost like political parties!


    It seems a lot like that (none / 0) (#35)
    by Militarytracy on Mon Apr 19, 2010 at 05:57:04 PM EST
    The current administration has a lot of sway over what is politically correct in the military circles and climate that they preside over.  In a certain respect Obama is practically an Independent in military political terms.  My husband also considers himself an Independent and I don't there is a single thing militarily that he disagrees with when it comes to Obama's decisions and governance of the military at this time.  

    Neither Party trusts the voters (5.00 / 1) (#4)
    by masslib on Mon Apr 19, 2010 at 09:09:08 AM EST
    over the noise campaign contributions can make.  Theoretically, it wouldn't matter if Repubs won more contributions from WS if the Dems passed bold reforms, because the voters would be so pleased it would nullify the campaign spending.

    They could score (none / 0) (#6)
    by jimakaPPJ on Mon Apr 19, 2010 at 09:19:19 AM EST
    really really big by shutting down the oil speculators and dropping gasoline prices and helping the economy.

    Of course too many on the Right are afraid of touching a supposedly "free market" and too many on the Left welcome high gasoline prices to reduce consumption and "protect" the environment.

    We are just humped.


    Not surprising at all (5.00 / 1) (#14)
    by ruffian on Mon Apr 19, 2010 at 09:52:49 AM EST
    Does Drum really think the opinions of the voters are more important to pols than the opinions of fat cats and donors? Please.

    A more accurate description is that the parties are trying to find the lowest common denominator of 'reform'. As long as voters don't give one of them a vastly better grade than the other, they will both be happy.

    Yes, another existing dynamic (none / 0) (#37)
    by Militarytracy on Mon Apr 19, 2010 at 06:04:37 PM EST
    well defined by you.

    Like it or not, part of what Clinton did to win (5.00 / 1) (#16)
    by ruffian on Mon Apr 19, 2010 at 09:57:37 AM EST
    in the 90's and put the brakes on total Republican domination was to make Dems more business-friendly. That meant getting cozier with Wall St.

    I was willing to accept that when it still seemed like the Dems were like night and day from the Repubs on civil liberties and social issues. Now? Not so much.

    Clinton, a pol after all (5.00 / 1) (#17)
    by Big Tent Democrat on Mon Apr 19, 2010 at 09:59:02 AM EST
    would, imo, seize the populist moment now.

    Obama should as well and well may do it.


    I think he would (5.00 / 1) (#18)
    by ruffian on Mon Apr 19, 2010 at 10:09:56 AM EST
    I think it is as much a personality issue as anything else. IMO Clinton is a populist at heart that did 'less populist' things when it was politically expedient. In these times however, I think he would let the big dog run.

    We'll see about Obama.


    I continue to go back to (none / 0) (#20)
    by Militarytracy on Mon Apr 19, 2010 at 10:18:24 AM EST
    Obama's book when he made the claim that FDR solutions are outdated and will no longer work.  Obama doesn't want to become a second FDR, he doesn't believe in the solutions for some reason.

    Very interesting in light of his (none / 0) (#23)
    by oculus on Mon Apr 19, 2010 at 10:55:23 AM EST
    statements in admiration of Reagan.

    Dissembling Meme Again? (5.00 / 1) (#26)
    by squeaky on Mon Apr 19, 2010 at 11:31:50 AM EST
    You are not that dumb that you cannot understand the difference between embracing of policy and moment? Propaganda seems to never die around here.

    But then again it is great propaganda, too bad that Obama is not running in an election, and too bad the "he embraces Reagan's policy's meme" did not gain traction, otherwise Hillary may have won.

    Guess you forgot this from your mentor:

    I will not take the easy political cheap shot here and take on Obama's point. Greg describes it well:

    OT, That post holds up I think (5.00 / 1) (#28)
    by Big Tent Democrat on Mon Apr 19, 2010 at 11:50:58 AM EST
    "Obama simply misunderstands how Reagan achieved that transformational change - to the detriment of the country I must add - he ran a partisan, ideological divisive campaign that excoriated Democratic values and trumpeted GOP values. He also race baited.

    Obama is running a post-partisan, nonideological campaign that is bereft of defenses of Democratic values and ideas. He is running an anti-Reagan campaign. His argument is simply ahistorical. It is precisely BECAUSE he refuses to try and make this a transformational campaign, a campaign to fight for Dem values, to persuade the country that the Dems are right, that his campaign is a promise unfulfilled.

    In short, Obama STILL does not get it."


    Maybe even still (none / 0) (#30)
    by ruffian on Mon Apr 19, 2010 at 11:57:02 AM EST
    Thursday's speech should be interesting.

    I'm not against business friendly (none / 0) (#38)
    by Militarytracy on Mon Apr 19, 2010 at 06:09:51 PM EST
    In that respect I feel that a few things that Clinton did were good things to do, and then Dubya took full advantage of any current situations and couldn't wait to let foxes guard henhouses.  Clinton did open certain doors, and then Bush had a big cocktail party and let all of his cronies kick in all the walls and Summers and Rubin and Greenspan were also free to exercise whatever unregulated markets they could dream up too!  I can't lay Bush's total lack of accountability every single day and where we ended up on Clinton.

    Forget FinRegs... (5.00 / 1) (#27)
    by kdog on Mon Apr 19, 2010 at 11:41:50 AM EST
    All we really need to do is let the high-rollers sleep in the beds they make instead of cleaning up after their spoiled arses.

    Meanwhile, the people must become smarter gamblers...be more careful about where, and with who, they place their wagers.

    The House never loses... (none / 0) (#32)
    by jimakaPPJ on Mon Apr 19, 2010 at 12:24:28 PM EST
    fixed low limit was invented for the drop....

    Now think about all those 401K's.


    Excellent analogy sir.... (none / 0) (#33)
    by kdog on Mon Apr 19, 2010 at 01:07:56 PM EST
    401k's = 2-4 Limit...nail on the head!

    Another day that I agree with Jim (none / 0) (#36)
    by Militarytracy on Mon Apr 19, 2010 at 06:01:12 PM EST
    Running to go write it down :)

    I can't say they are long over (none / 0) (#1)
    by Militarytracy on Mon Apr 19, 2010 at 08:57:42 AM EST
    The people voted Obama in FOR CHANGE.  So what if I never believed in it and I didn't see anyone out there who was really going to do that to vote for, just about everyone else did see that and has been shafted.  The people are hurting worse than ever now and the hurting will continue.  The Democrats can go ahead and think that they need to pony up to the money but there is a meltdown coming their way too and it is going to be flat ugly!  I don't buy this Wall Street markets are healed thing one little bit either.  There is something very false out there totally inflating the markets.  Mostly because there isn't any way that it can actually be so vibrant when we have the unemployment and the bankruptcy that we have right now.

    I dunno (5.00 / 3) (#2)
    by Big Tent Democrat on Mon Apr 19, 2010 at 09:02:29 AM EST
    Obama was elected not so much on his positive agenda of change but rather as an anti-Bush change.

    It was my view that he could have, like FDR, made the change something positive and about his own change agenda.

    I think that opportunity was squandered. It's not coming back.

    This is in fact much like a third term of the Bill Clinton Presidency, which is, of course, better than a first McCain Administration. It could have been so much more imo.


    A third Clinton term (none / 0) (#7)
    by Militarytracy on Mon Apr 19, 2010 at 09:22:40 AM EST
    is an excellent analogy.  I saw a diary about Clinton saying that he was wrong to listen to Rubin and Summers yesterday, and some dimensional chess speculation about why he would choose to say such a thing at this time.  I tend to think that he too sees an extension of what he did and how he did it but he now sees serious flaws in the extension that will now hurt a lot of Donut shop employees.

    Did you read Krugman on Wall Street today? (none / 0) (#9)
    by Dr Molly on Mon Apr 19, 2010 at 09:42:28 AM EST
    Great Krugman column. His last paragraph:

    "For the fact is that much of the financial industry has become a racket -- a game in which a handful of people are lavishly paid to mislead and exploit consumers and investors. And if we don't lower the boom on these practices, the racket will just go on."

    Krugman is in the wrong place (5.00 / 1) (#10)
    by Big Tent Democrat on Mon Apr 19, 2010 at 09:44:57 AM EST
    on the prescriptions in my view.

    Volcker's focus on size is essential to effective regulation.


    Do you mean (none / 0) (#11)
    by Dr Molly on Mon Apr 19, 2010 at 09:47:39 AM EST
    essential and sufficient, or essential as one component of an effective fix?

    Essential but not sufficient (none / 0) (#12)
    by Big Tent Democrat on Mon Apr 19, 2010 at 09:50:43 AM EST
    What about restrictions on complexity? (none / 0) (#13)
    by observed on Mon Apr 19, 2010 at 09:52:42 AM EST
    And what restrictions will prevent the derivatives market from having a nominal value in the hundreds of trillions?

    I am less enamored of that (5.00 / 1) (#15)
    by Big Tent Democrat on Mon Apr 19, 2010 at 09:55:34 AM EST
    I really think size, capital requirements and leverage restriction are the key issues.

    On these points, I think Krugman is right and Volcker is wrong.

    Recall that I think the repeal of Glass Steagall is only a culprit in the sense that it allowed financial institutions to become too large.

    Hell, if we really enforced the antitrust laws a lot of these problems would be solved.


    That is a reality that really ticks me off (none / 0) (#19)
    by Militarytracy on Mon Apr 19, 2010 at 10:16:28 AM EST
    That we have laws currently available that could do so much to end this pain and suffering for the little people, but they are not being enforced and our leaders pretend that we must fight this out with a sold out Congress.

    Furthermore, it is not clear that the regulations (none / 0) (#21)
    by Buckeye on Mon Apr 19, 2010 at 10:31:35 AM EST
    that were in place did any good.  In fact, some areas in the financial sector that were heavily regulated did worse than some areas that were not regulated (i.e. hedge funds).  Geitner has even admitted that entities failed where regulations were strong and entities failed where regulations were very light or non-existent.  And vice versa.

    Then you have all the areas where regulators just fell asleep at the wheel and were incompetent (credit rating agencies, Congress, SEC, etc.).

    I think the big key is capital requirements.  As entities grow in size and exposure, they must have adequate cash reserves to keep the entity from failing if everything goes south on them.  That would be an easy regulation to implement, quantify, and enforce.


    I don't trust any of the excuses (none / 0) (#24)
    by Militarytracy on Mon Apr 19, 2010 at 11:12:51 AM EST
    or reasonings that Geithner gives.  I just watched the Bill Moyer episode that BTD did the posting on.  You have Larry Summers calling Brooksley Born and telling her that he was thirteen bankers in his office saying that if she regulates derivatives it will blow up the whole world and then regulating derivatives doesn't happen.  If you want to point to something specific that Timmeh said that can actually be fact checked I could be interested.  Blanket statements from him attempting to avoid his own accountability by playing that B.S. about how nobody could have predicted what happened though are devoid of any actual credibility or meaning.