Fed Up with FinReg: Rooseveltians ReactRobert Johnson, Roosevelt Institute Senior Fellow and Director of the Project on Global Finance; Executive Director, INET:
“Scott Brown made them go back to the woodshed, and that made them look worse once again, but other than that, the bill is the same industry-crafted/not-up-to-the-task/so-called ‘accomplishment’ that leaves 4 out of 5 Americans in the Bloomberg survey yesterday suggesting that they wouldn’t feel protected from a future financial crash.”
Appearances are all that matter?
Michael Greenberger, Founder and Director of the Center for Health and Homeland Security and professor at the University of Maryland School of Law, who participated in the Roosevelt Institute’s Make Markets Be Markets conference:
“In last Sunday’s New York Times, Paul Volcker, with a tinge of unhappiness and regret, graded the Dodd-Frank financial reform bill as a B-. With an equal amount of regret, I agree. But, I am not unhappy. I consider the B- a mid term grade. I say this, because the bill places so much emphasis on effective implementation. To be sure, legislative directives are now in place to guide the regulators to a path of effective enforcement. For example, for purposes of regulating the completely opaque and highly risky derivatives market — whose synthetic collateralized debt obligations and naked credit default swaps turned our economy into a unpoliced and poorly capitalized multi-trillion dollar casino– Dodd-Frank sets the contours that have the potential of converting that entire market into a fully transparent and fully capitalized environment. But, dozens of rulemakings, studies and reports stand in the way.
“If properly regulated, the very kind of risky trillion dollar bets that brought down the economy can be collared, reduced and, if necessary banned. If that happens, the derivatives title would get a final grade of A. If, however, in the subterranean agency processes through which implementation will be birthed, well funded Wall Street advocacy predominates, and the progressive institutions — the unions, consumer and environmental groups, and small businesses — are checked by a lack of resources, the B- could turn into an F. In short, the fight to stabilize the economy through banning the poorly capitalized casino trillion dollar bets depends completely on regulatory follow-through. Dodd-Frank gives reformers the weapons. The question is do progressives have the staying power and resources to make a success of this legislative effort.”
Now, I can agree with that.
Thomas Ferguson, Roosevelt Institute Senior Fellow and professor at the University of Massachusetts, Boston:
“The bill makes some marginal changes, but it does not attack the fundamental problems that got us into the disaster of 2008...
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“It’s easy to understand why Sen. Russ Feingold said he just could not vote for this bill — but you may get a worse bill under another Congress. The very same Congress that’s pushed this bill through at a snail’s pace also created the Angelides Commission, which is supposed to inquire into what happened and why. This, of course, is not going to report until after the November elections. And so right from the beginning you knew the folks who were pushing this bill were not serious. I mean, that is to say, if they learned anything from the Commission, they weren’t planning to use it in the bill. But they were planning to take in record amounts of campaign contributions and allow lobbyists to go wild offering them the sun, the moon, and the stars.”
Waiting for perfect is not the answer.
Mike Konczal, Roosevelt Institute Fellow:
“The plan of counting on moderate Republicans instead of progressive Democrats like Cantwell and Feingold gave people like Scott Brown the chance to make crony-style changes to the bill that cheat the general public and help the biggest players. People with generic checking accounts will pay more to protect the largest hedge funds and investment banks. Is that what we want?”
Simon Johnson disagrees.
Wallace Turbeville, ND20 contributor and former Goldman Sachs VP:
“Passing financial regulation is good politics and consumers will benefit from some protection. But the twin evils of incentivized risk taking and ‘too big to fail’ survived. Congress did not swing and miss, but it managed only two foul balls. Perhaps we should have waited until Treasury and the Fed were past being petrified of the weakened financial system.
On bank abuse of market power, Congress did not swing and miss; the bat never left its shoulder.
During implementation, vigilance must be maintained. The banks will work overtime. They don’t see the justification for change.”
Consumers will benefit and regulators must be vigilant? I'll take it.
Henry Liu, ND20 contributor:
“... The FinReg bill missed the target by not addressing the problem of cross-border wage arbitrage by U.S. transnational corporations.”
Yeah, the bill didn't address everything, but it is a significant step forward, providing a solid foundation upon which to build.
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