graphic: RedKid.net
Financial reform may be turning into Healthcare II: The Sequel, with Democrats giving away some of its most effective provisions without a struggle. The Administration now seems to be signalling its willingness to cave on two critical elements of reform: the Volcker Rule and the CFPA.
The Administration announced the “Volcker rule” with great fanfare last month, explaining that financial institutions would no longer be able to trade – speculate, really – with their customers’ accounts. This was widely seen as taking power away from Tim Geithner, who’s been softer than Volcker on this issue.
Re Geithner: He’s baaack! Geithner lieutenant Lee Sachs took point yesterday in announcing a virtual rollback of the Volcker rule before it even took effect. Ben Bernanke joined the chorus, too.
And the Administration appears to be walking away from the Consumer Financial Protection Agency, too. As discussed yesterday, WaPo’s Steven Pearlstein is leading the charge for the “creative, bipartisan” Dodd/Corker compromise – an agreement which would gut both Volcker and the CFPA.
Why compromise? A fairly robust financial reform initiative has passed in the House, so why not use reconciliation in the Senate? It would certainly affect the deficit, so there can be no meaningful procedural objection. Unless grassroots pressure is applied, financial reform may become hopelessly compromised before it even passes.
