Shakespeare would likely describe the latest major legislation winding its way through Congress as a piece of legislation crafted by idiots, full of sound and fury, signifying nothing. Rather than address the systemic distortions created by prior government policies, and which caused the financial meltdown, policy makers are now “[putting] a lot of faith in the watchful eye of regulators to prevent another financial crisis,” according to the Washington Post.
Nearly two years after tremors on Wall Street set off a historic economic downturn, congressional leaders greenlighted a bill early Friday that would leave the financial industry largely intact but facing a more powerful network of regulators who could impose limits on risky activities.
The final bill took shape after a 20-hour marathon negotiation between House and Senate leaders seeking to reconcile their separate versions. The legislation puts a lot of faith in the watchful eye of regulators to prevent another financial crisis. New agencies would police consumer lending, the invention of financial products and the trading of exotic securities known as derivatives. Bank supervisors would have the power to seize large, troubled financial firms whose collapse could threaten the entire system. The bill calls for banks to hold more money in reserve to weather economic storms but leaves the details to regulators.
…”We are poised to pass the toughest financial reform since the ones we created in the aftermath of the Great Depression,” Obama said at the White House, adding that the bill “represents 90 percent of what I proposed when I took up this fight . . . We’ve all seen what happens when there is inadequate oversight and insufficient transparency on Wall Street.”
Essentially, Congress has decided that all we need is yet more overpaid bureaucrats. No reform of Fannie and Freddie. No efforts to stop politicians from continuing to force banks to issue risky loans so that they can point to expanding home-ownership under their watch. Instead, we get harmful price controls on debit cards, which has nothing to do with the cause of the 2008 recession.
Even the crafters of the bill aren’t really buying their own stance that more government will help. In one of those rare moments where a politician accidentally let’s the truth slip out, Senator Dodd admitted, “No one will know until this is actually in place how it works.” Belief in big government really is all about faith.