Robert Stein 1924-2014

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Monday, March 29, 2010

Financial Reform: The Opacity of Hope

The glaring area in which this Administration has been Change-challenged is up next, and the question is whether the President will direct his new-found audacity at the money manipulators who have been wrecking the economy.

Unlike health insurers, the financial industry has little public support after the meltdown, but obfuscation is rife and will get worse as lobbyists pour tons of money into pressuring Washington lawmakers already on their payroll, running ads and petition drives.

What's worse is that the White House, led by former Wall Streeters Geithner and Summers, has so far shown little appetite for the kind of real reform advocated by former Fed chairman Paul Volcker, who is only unleashed on rare occasions to lend them credibility.

In Congress Chris Dodd, who opened the door to disaster back in 1991 with an amendment that, in the words of Pulitzer Prize-winning Gretchen Morgenson, "expanded the cast of institutions that could call on the Federal Reserve's emergency backstop powers if they were ever to get into trouble," is heading the Senate Banking Committee's reform efforts and, while making grand promises, is also warning against "excessive regulation."

Even with his imminent retirement, Dodd and his Senate colleagues are short of what Morgenson calls regulatory DNA, offering bills that are "half-baked and really do not address some of the crucial elements of reform that are needed if we want to prevent this kind of crisis from happening again," prompting her interviewer Bill Moyers to suggest that the whole process sounds like making arsonists the new fire chiefs.

The real hope in all this is that Barack Obama, with a zest for combat sharpened by his health-care victory, will abandon caution and take on an industry that caused a meltdown, took billions of bailout money and is back doing what caused the crisis in the first place.

“He goes into these into these negotiations, and into these legislative battles, with a stronger hand," says White House Press Secretary Robert Gibbs, "because people understand that he’s going to fight for what he believes in.”

Some Republicans may join him, Gibbs believes: “Understanding that what they got out of the health care thing was virtually nothing, I think they may think twice on financial reform.”

Those who have lost much of their life savings in the past two years won't be ready to bet what remains on that.

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