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Financial reform may be turning into Healthcare II: The Sequel, with Democrats giving away some of its most effective provisions without a struggle. The Administration now seems to be signalling its willingness to cave on two critical elements of reform: the Volcker Rule and the CFPA.
The Administration announced the "Volcker rule" with great fanfare last month, explaining that financial institutions would no longer be able to trade – speculate, really – with their customers’ accounts. This was widely seen as taking power away from Tim Geithner, who’s been softer than Volcker on this issue.
Re Geithner: He’s baaack! Geithner lieutenant Lee Sachs took point yesterday in announcing a virtual rollback of the Volcker rule before it even took effect. Ben Bernanke joined the chorus, too.
And the Administration appears to be walking away from the Consumer Financial Protection Agency, too. As discussed yesterday, WaPo’s Steven Pearlstein is leading the charge for the "creative, bipartisan" Dodd/Corker compromise – an agreement which would gut both Volcker and the CFPA.
Why compromise? A fairly robust financial reform initiative has passed in the House, so why not use reconciliation in the Senate? It would certainly affect the deficit, so there can be no meaningful procedural objection. Unless grassroots pressure is applied, financial reform may become hopelessly compromised before it even passes.
20 Comments
From disappointed to disillusioned to dismayed to disgusted. This type of behavior from a Republican administration would be expected. This is not what the voters voted for. Better Democrats needed ASAP.
The number one reason that Obama and the Democrats poll numbers are plummeting is lack of financial reform.
And it’s extremely clear that Obama’s own people are holding things up.
They’ve drug out the HCR debate nearly a year in order for Obama to cave before forcing the Dem senators to vote on a PO in reconciliation. At least with financial reform he’s become more efficient in caving right off the bat.
What’s Obama afraid of? Why not do both reforms right?
Force the senate to vote on the PO in reconciliation.
Put real regulations on the financial sector and let ‘em yell.
Well he’s certainly not afraid of making the general public angry.
Honestly, Obama is probably just keeping campaign promises to his largest campaign donors.
Pretty much everything that Obama has done so far amounts to funneling money to financial institutions or extending tax breaks.
Look at the 75 Billion “Help for Homeowners” plan. Elizibeth Warren took a look at it and came to the conclusion that it wasn’t keeping anyone in thier homes long term, just spreading out the mortgage defaults for the banks.
Add in the 23.7 Trillion in give-aways, loans and guarantees that have been put at the banks disposal(according to TARP inspector general).
And then there’s Fannie and Freddie who’s bailouts Geithner expanded from a 400 Billion limit bailout to completely unlimited bailout.
With all this money pouring out of our Treasury we should have full employement and zero forclosures. Instead we have mass unemployment and millions of forclosures(21% more in Obama’s 1st year than in Bush’s last). Also many of our states and local governments have completely busted budgets.
I expect that the final healthcare bill will be much the same, a bill to ensure the profits of our health insurance companies.
Do birds fly?
The big problem is that the entire debate takes place on some mythic ground where Chicago school economists perfectly understand the economy, where financial markets operate in the public interest by the miracle of the invisible hand, where financial speculation is a great thing, where government is an abject failure which should kill itself and get out of the way of the markets, and on and on.
The financial elites accept these myths, and believe that minor tweaks are sufficient. Congress and the White House agree on these myths.
Evidence is irrelevant. These hypotheses cannot be falsified by real world events.
Liberals and progressives have abandoned the entire area of finance for decades.
When all this changes, maybe we will break the magic spell that has immobilized us.
Obama is throwing the Game on purpose, he is helping the other team win, and wants the republicans to win.
The Obama score card
trillion dollar bail out for banks Obama says Yes
drug importation Obama says no
public options Obams says no
excise tax on union health care plans Obama say Yes
individual mandate Obama says Yes
Bush Torture Obama Says O-kay no problem
Volker Rule Obama says No
penaly for not buying health care increase it Obama says Yes
Obama is not FDR, LBJ, more like Hoover
Obama is no friend of progressives.
House Dems need to ignore the White House and Senate Dems, and look at for their political lives. Obama wants to work with republicans because he is one.
12 months ago Dems had a 32 point lead on the GOP, you just don’t lose a 32 point lead, unless you want to lose it.
Nice summary. I’d throw in: DADT Appoint a commission.
I don’t buy your argument, and I think you can type a lot of words, but, I just don’t agree at all.
Can I ask a question? Why are you here? What are you talking about? I really am curious. I don’t think I have ever seen this on a blog.
I’m thinking you have nothing else to do. I’m trying to understand why a person would spend valuable time reading blogs and trying to understand and analyze what has just taken place in our government (I’m being generous here) and say something like that. I’m really trying to get it. I can’t. Are you on the clock or something? Putting in a token effort of some kind? Meeting some sort of beauty queen contest “such as” quota?
There are places for interaction like this. It doesn’t take any sort of intelligent reflection of any sort. Its a nice place, some say. Twitter. (or maybe comedy central because that was really funny).
The kindest interpretation is that Obama is heavily into process, and has a conceit that he can bring folks together, no matter how striking their differences. I don’t think it ever dawned on him that all of the Rs would set aside the good of the nation and define their success as his defeat. A community organizer is not wired to even consider that possibility.
The saddest thing about today for me was that, given his considerable skills and intelligence, he could have even won the argument for single payer — or at least fought to a draw. What a wonderful thing that would have been: for our first black president to persuade 50% of Americans that single payer was the way to go.
What a wasted opportunity.
Here we go again. We can keep beating Senate Democrats with our broom to do the right things — or we can oust them in their primaries and replace them with the kind who don’t need to be whipped down the road to progress.
Sure can’t trust what Bernanke and Geithner say.
http://www.talkingpointsmemo.com/news/2010/02/whouse_says_committed_to_volcker_rule_on_trading.php?ref=fpa
“The administration is as committed to the Volcker rule as we were the day the president announced (it) because we should not allow banks to use the federal safety net to support risky activities that are unrelated to serving their customers,” White House Deputy Communications Director Jen Psaki said.
It is important to remember that there were big holes in the Volcker rule. It didn’t cover the shadow banking system so firms like Goldman could still get the money to fuel their proprietary trading. As for the CFPA, Barney Frank presided over its gutting in the House months ago and Dodd never wanted it at all in the Senate.
Financial reform does resemble the Administration’s treatment of healthcare reform in that neither involves an iota of reform.
Guess you answered the author’s question of “Why compromise?”; because it’s an ingrained habit.
Obama is Bush’s 3rd term.
There better not be a 4th.
I agree there better not be a fourth.
This is just the flip side of the Republican obstructionism.
Obama doesn’t care what gets passed as long as he can call it “historic reform” in his re-election campaign.
It’s time for the dems to grow a set of stones or a lot of them will be gone in 2010 and 2012.
Why compromise?
It’s part of the pattern: do what is politically feasible, not what the nation needs or what is morally correct.
Politically, this is actually an easy call for the Obama team: Keeps the banksters’ money flowing to him, to the extent possible, and the Rs certainly will not object to failing to re-regulate.