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August 31, 2012

Sneak Attack on Financial Reform


There has been much speculation about what a Romney presidency and/or Republican control of the Congress would mean for financial reform.  Two recent articles have made it pretty clear:  Wall Street profits would be protected and Main Street pockets would be opened again to bailout out the bankers when their reckless investments and trading go bad.  

It is pretty shocking that any responsible person would do this when the 4th anniversary of the bankruptcy of Lehman Brothers, which sparked the financial collapse, is just two weeks away. 

But, they aren’t going to say they are doing that and they aren’t even going to do it directly or openly.  That would be bad politically because most people still think Wall Street should be reined in and tightly regulated so that they can’t crash the financial system again and cause another Great Recession or, worse, a second Great Depression, which we just barely avoided last time.

So rather than honestly and openly repealing financial reform, they are going to claim they are fixing it, reducing regulation and other Orwellian claims that will be the opposite of what they are really doing.  This would be the worst of all worlds:  this would leave the form of financial reform in place, but without the substance.  This would insidiously give people a false sense of comfort and safety while the risk of Wall Street’s unregulated recklessness will continue mostly as it was before the financial and economic crisis.  This will almost certainly lead to another financial crisis and taxpayer funded bailouts “to save the economy and Main Street.”

Here’s how the Bloomberg story, “Romney’s Dodd Frank Kill Pledge Collides with Wall Street Agenda,” put it: “Mitt Romney has pledged to repeal the Dodd-Frank Act. He won’t, and that’s just fine with Wall Street.  Instead, Romney may give the financial industry something it wants more: a revamped Dodd-Frank that would accommodate some of the most profitable and riskiest activities while preserving a patina of protection for investors and consumers.”

Translation:  Protect Wall Street, not Main Street, and put taxpayer’s at risk of having to bailout Wall Street again.

Here’s how the American Banker story, “What a Romney Victory Would Mean For Banks,” put it:  “Even if Republican presidential nominee Mitt Romney wins the White House this November, his stated goal to repeal the Dodd-Frank Act is simply not going to happen …. Instead, Republicans will try to chip away at what they see as the worst parts of Dodd-Frank, continuing a legislative strategy they began in 2011.”

Read the full stories here and here



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