With the passing of financial reform, Obama has now passed three major pieces of legislation; health care reform, financial reform, and the stimulus–albeit not the perfect pieces of legislation, but none the less historical pieces of legislation considering the roadblocks at every turn by the republican party. The financial reform bill does a lot to curtail another financial disaster–not guaranteeing protection from another economic disaster–but accomplishes it by giving more discretion to the same regulators who failed the American people the last time around.
“We can’t legislate wisdom or passion. We can’t legislate competency. All we can do is create the structures and hope that good people will be appointed who will attract other good people ” said Senator Christopher Dodd, the crafter of the financial overhaul, in an interview with the New York Times.
Is he serious? I am sorry, but Senator, more regulator discretion is the structure created by this bill. The legislation places much faith — and much authority — in regulators to spot brewing problems in the financial system and to prevent another crisis. The same regulators who missed all the warning signs leading up to the crisis. Same regulators who are in bed with the financial industry
Until we change the structure of Wall-Street, we will continue to have more and more melt downs throughout our financial system. The only way to change the structure is to change the relationship between Washington and Wall-Street.
“The underlying problem is that the bill doesn’t do anything to change the basic balance of power between Wall Street and Washington, which is partly based on the fact that it’s a lot better to be a banker than to be a regulator, and the only reason to be a regulator (if you believe in free-market incentives) is so you can then become a banker”, writes James Kwak of Baseline Scenario.
I understand what Senator Dodd is saying;not only is it important to have a well structured bill-which it is not on many levels–but that it is also important to appoint good people in place to enforce the bill. It is OK to think that way, but what about when the democrats–who many believe fight for the people are not in power to appoint people to a regulator position? We all know what happens on Wall-Street when republicans are in power. Deregulation. A bill must be based on more than hope.
“Yes, I’m still sticking to my position that the bill is better than nothing. The alternative was sticking with the environment that gave us a bloated, predatory financial system and the financial crisis. But it’s still a missed opportunity. And over the next couple years, as regulators (lobbyists) write the rules necessary to implement the bill, we’ll find out if anything really has changed”, writes James Kwak.