Finance Reform is Overdue
With House passage of tighter regulations, it’s up to the Senate to protect the nation from a repeat of abuses that brought it to its knees.
Washington’s taxpayer-funded bailouts of the very financial institutions that caused the near-collapse of the world’s financial system had Americans seeing red, whether they thought the bailouts were a necessary evil or just evil.
Either way, the high-stakes risks that turned into cascading losses in unregulated or loosely regulated financial markets proved too rich for the pocketbook of John Q. Public. Washington had to get the wildcatters under control. One would think.
House Democrats, with no help from Republicans, have passed a major regulatory overhaul of the financial industry to protect consumers and reduce the risk of taxpayers facing future bailouts for companies deemed “too big to fail.”
If anything, the House bill did not go far enough to protect the economy from a repeat of the disaster that plunged the world into deep recession.
The lack of bipartisan consensus in the House (where the 223-202 vote included 27 Democratic defections) indicates a fight in the offing for the hearts and minds of moderate Democrats in the Senate, which is expected to vote on a finance reform bill next year.
To see the need, business-friendly senators should look at the economic tsunami that a deregulated Wall Street of high-stakes gambling losses, rewarded by extra-orbital executive payouts, has visited on Main Street.
Yet Republicans have been intoning the high-rollers’ self-regulation mantra that government policing only tightens credit and slows job growth — as if the country isn’t still reeling on both counts from the effects of leaving the financial markets to control themselves.
The bankruptcy of thought behind the GOP opposition is evident in Republican attempts to turn on its head a House provision for a $150 billion fund to cover the costs of dismantling large institutions that fail.
The House bill would empower the government to break up even healthy companies if regulators thought the businesses could threaten the financial system — if, in the lingo of the Great Recession, they had grown “too big to fail.”
Republicans decried a fund to help in dissolving any that do fail as yet another bailout pool, ignoring a critical distinction: This one would be filled, not with tax dollars, but with fees charged to the large financial companies that fish in risky waters for huge profits. They, not taxpayers, should absorb the risk.
As House Democrats noted, Republicans met with about 100 industry lobbyists before voting against the finance bill.
It would be the worst kind of sell-out of the public interest to special interests if, after the world financial meltdown, Congress were to fail to enact strong regulatory reform.
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