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August 2, 2011

A Bad Day For Financial Reform

For the first time in history, raising the debt ceiling to maintain the country’s triple-A credit rating was used as political leverage.  The “deal” that was stuck will almost certainly usher in an age of austerity where almost everything will be cut sooner or later.  Deficit and debt reduction have been elevated as more important than any other goal or policy.  That almost certainly means that the key financial regulatory agencies, the CFTC, the SEC and others, will have their budgets cut or flatlined.  After all, how can we cut social programs and other critical needs and not a few regulatory agencies, will be a compelling argument. 

These agencies are already struggling under the lobbyist onslaught, the bashing by industry and its allies in the media, government and elsewhere, not to mention the existing underfunding.  (See 8/1/11 NYT Wall Street Continues to Spend Big on Lobbying)  In fact, the SEC just released its revised schedule of upcoming Dodd Frank rulemakings and it is now projecting not to complete its rules until the end of 2012 and beyond. That was before any cuts likely to result from this debt ceiling deal. 

For anyone who cares about financial reform and preventing the next financial crisis, this is a bad day. 

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