... and it sounds like a good start. The devil is in the details, of course, but Obama's new proposals today sound mostly like steps in the right direction. I don't like the tone of all the President's comments today (the one's I have read in the linked article, anyway) but I'm willing to let the man have his rhetorical flourishes if the policy is good.
I hope to look at this more later, and may or may not have more comments, but I do want to point out something really stupid: the initial Republican response:
The initial reaction from some Republicans has been sharply critical, with several saying the White House is trying to hammer big banks to score political points.Several points can be made off the top of my head.
"This renewed focus on financial services reform by the Obama Administration is clearly a transparent attempt at faux-populism, in light of the outcome of the Massachusetts Senate race," said Rep. Scott Garrett (R., N.J.). "The American people have rejected extreme government expansion into the private sector, be it in the health care, financial services or auto industry."
- Of course the President is trying to score political points, as are his critics. Football players play football, and politicians play politics.
- Big banks may not deserve to get hammered politically right now - but the banksters running them certainly do deserve it. The common perception is that the bankers got bailed out by the government, and are now pocketing the profits while screwing everyone else. The common perception is correct in this case, at least in regards to the Too Big To Fail institutions.
- Government has the responsibility to regulate banks and financial institutions. Currency is issued by the US government, and banks play a role in how that currency is used. As such they are not operators in a free market. Good regulation doesn't mean over-regulation. But it doesn't mean no regulation either. Clearly the banks (and other organizations like Fannie Mae and Freddie Mac) did not manage their affairs well over the last 12 years. And the regulatory agencies got much wrong as well. It is time to address those issues.
- If the banks were free operators, they should have been allowed to fail. But several of the biggest institutions control too much of the market to allow that to happen. The size of the banks means that the government WILL have to get involved if times get rough, and not just through the FDIC. Reducing the size of the largest institutions would mean that we could let individual banks fail. That would reduce the intrusion of government into the market, not increase it.
- Hand in hand with the fourth point, regulations could insure that separate business models don't operate under the same roof, extending systemic risk.
So for toady, right now, Obama is proposing better policy. That is new - most of his proposals have been terrible. And the Republicans are proposing bad policy. That's the same-old same-old.
Update: I forgot to mention the first thing that I thought of reading Garrett's comment. I've made it a separate post.