Go Bravely Forward
April 15, 2010 12:40 PM
President Obama and Congressional Democrats are headed for a fight with the GOP and Wall Street over financial services regulatory reform. The results of the financial meltdown have been disastrous, and clearly strong regulation is needed to prevent similar irresponsible actions by financial services executives. At the same time it is also possible to go too far, and some types of regulation could indeed hurt the economy more than they could contribute to preventing another meltdown.
Opinions on the latter vary greatly, and those opinions are mainly conjecture no matter which side they fall on. In the opinion of the financial services sector, all substantial regulatory changes are risky. If we heed their opinion, there will very little protection against another meltdown in the future. We've seen the results of the meltdown, and we would rather risk over-regulation than leave ourselves exposed to another financial meltdown. Besides, any regulatory excess will soon be corrected anyway. We can trust the financial services sector to get right to work on correcting any such excesses, even before President Obama signs the bill! That would be a productive use of their time and money. For that matter, even if the bill was virtually toothless, we can also count on the financial services sector to get right to work on watering it down further before President Obama signs the bill. Better that they productively spend their time and money bringing the measure back to neutral rather than gutting a weak bill entirely. At least that way we'll buy ourselves a couple extra years before the next meltdown.
Opinions on the latter vary greatly, and those opinions are mainly conjecture no matter which side they fall on. In the opinion of the financial services sector, all substantial regulatory changes are risky. If we heed their opinion, there will very little protection against another meltdown in the future. We've seen the results of the meltdown, and we would rather risk over-regulation than leave ourselves exposed to another financial meltdown. Besides, any regulatory excess will soon be corrected anyway. We can trust the financial services sector to get right to work on correcting any such excesses, even before President Obama signs the bill! That would be a productive use of their time and money. For that matter, even if the bill was virtually toothless, we can also count on the financial services sector to get right to work on watering it down further before President Obama signs the bill. Better that they productively spend their time and money bringing the measure back to neutral rather than gutting a weak bill entirely. At least that way we'll buy ourselves a couple extra years before the next meltdown.
Ultimately we are looking at the same math as the health care bill. If
the Administration and Senate Democratic leadership want to pass the
bill they will need 61 votes, and will need to make such compromises as
necessary to get those votes. That's fine with us. The financial
meltdown was real, but the risks of over-regulation are a matter of
opinion. We should all support the Administration and Senate leaders who
appreciate the gravity of the risks in this effort. Supporters of
substantial regulatory reform have differing views amongst themselves on
what will work best. We should recognize the challenge of getting the
needed votes and should temper our own respective opinions regarding
specific provisions in order to facilitate the immense task of getting
the kind of financial services reform we need through Congress.
Leave a comment