Is Wall Street Reform a Big Deal?

Is Wall Street Reform a Big Deal?

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There is a bit of uncertainty over whether recent legislative victories from the Obama Administration and Congressional Democrats have resonated with the American public.  References abound to the recent financial reform bill which is touted as both historic in terms of intention and legacy, but lacking as far as substance and ultimate mission.  The big question remains: is what is being represented as the largest policy overhaul of the financial industry in U.S. history really that large?  And, will it prevent another crisis?  Going way outside the Beltway for a moment, gaining perspective from outside looking in, Jim Dee in the Belfast Telegraph doesn’t think so:

After all the self-congratulatory Congressional and White House back-slapping fades, history will likely judge the financial overhaul bill that president Obama will soon sign into law as a major dodged bullet for Wall Street – and a time when its army of Capitol Hill lobbyists really earned their pay.

As for the chief villains of the 2008 global meltdown – the deliberately complex products such as derivatives and credit default swaps – they’ll face greater scrutiny. But, thanks to the efforts of financial sector lobbyists, the Dodd-Frank bill allows for continued opaqueness that critics contend will lead to more reckless trading in the future.

William K. Black in CNNMoney concurs with that assessment, clearly portraying the financial industry as a major crime syndicate poised to make significant short term gains while unnerved by the long term risks of a future crisis:

Financial regulators, white-collar criminologists, and economists all agree that perverse incentive structures cause crises and they agree that the finance industry’s incentive structures have long been perverse.

The Obama administration asserts that the financial reform bill the President will sign into law this week will prevent future crises. In fact, it will fail to do so because it does not effectively address those perverse incentives. Indeed, it increases the likelihood of the accounting scams that are the very reason why perverse incentives pay.

Exacerbating that is a pattern emerging in the wake of most policy victories attained by the President. The general public can’t seem to grasp exactly what’s in the bill or how it benefits them. The Administration’s communications problem is rather pronounced, proving troubling for Democrats on Capitol Hill seeking re-election. This explains the President’s recent and very sharp pivot attacking Republicans on the extension of unemployment benefits – a way to make the connection between high-brow policy achievement and kitchen table concerns.

It may take some time before the White House and Democrats expect an immediate turn in polling numbers in the aftermath of financial regulatory reform.  Reports Julie Mason in the Washington Examiner:

White House enthusiasm for the measure is wildly out of sync with two new polls showing skepticism and mystery surrounding financial reform.

A Bloomberg National Poll found 79 percent have little or no confidence the bill will prevent or soften a future financial crisis. A 47 percent plurality say it will help the financial sector more than consumers.

And 38 percent in an Ipsos Public Affairs Poll had never heard of the bill, while 33 percent heard of it but knew almost nothing about it.

Of interest will be how the electorate responds to legislative accomplishments in the 2010 midterm elections.  And, in yet another example of a larger effort to discredit the Administration and Congressional Democrats through aggresively orchestrated “reverse racism” race-baiting, Republicans and conservatives are raising racial concerns over the bill, accusing its authors of inserting quotas favoring racial and gender-based hiring by the financial industry.  Newsmax’s David A. Patten reports:

Four members of the U.S. Commission on Civil Rights recently penned a letter to Vice President Joe Biden, Majority Leader Harry Reid, and several other leading senators, objecting to the new fair-employment regime in the Dodd-Frank legislation now headed to the president’s desk.

“The likelihood that it will in fact promote discrimination is overwhelming,” the letter states.

Section 342 of the bill calls for an “Office of Minority and Women Inclusion” to be established in each of 29 federal bureaus and offices.

The regulations appear to go beyond ensuring that discrimination in hiring decisions does not occur. Instead, they require assurance of “fair inclusion.”

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