{"id":581217,"date":"2010-05-26T22:01:15","date_gmt":"2010-05-27T02:01:15","guid":{"rendered":"tag:theatlantic.com,2010-05-26:mt-57324"},"modified":"2010-05-26T22:01:15","modified_gmt":"2010-05-27T02:01:15","slug":"stop-hyping-financial-reform","status":"publish","type":"post","link":"https:\/\/mereja.media\/index\/581217","title":{"rendered":"Stop Hyping Financial Reform"},"content":{"rendered":"

Last week, the Senate followed the House and passed a bill to
\nregulate Wall Street, all but ensuring President Obama another major
\nlegislative victory. At moments like these, the Washington press corps
\ndrops its adversarial tone and adopts a witness-to-history earnestness.<\/p>\n

Pronouncements are made about the historic nature of the new law
\n(“The most profound remaking of financial regulations since the Great
\nDepression,” declared the Washington Post). The key figures, like
\nSenators Blanche Lincoln and Christopher Dodd, are lionized (“Dodd
\nPrepares to Depart in Triumph,” blared The New York Times). All of this
\n is routine and customary and to be expected. It’s also lazy and
\nmisleading.<\/p>\n

Like a good pulp thriller, the standard media narrative of any major
\nlaw requires high stakes, a clear delineation between good guys and bad
\nguys, and a satisfying resolution. But the truth about legislation,
\nincluding financial reform, is usually more mundane.<\/p>\n

Politicians tout modest reforms as being great ones. They act in
\ntheir own self-interest. And they often can’t gauge a law’s
\neffectiveness until years after the fact, though you’ll rarely hear
\nthis. For the press, the tradition of “writing for history” entails
\nburnishing the story, and that often means subordinating what was really
\n at stake and why the major figures acted as they did.<\/p>\n

Three points in particular are likely to be underplayed. First, the
\nnew financial regulations are the most profound since the Depression
\nchiefly because most of what Congress did in the interim was to
\neliminate regulations, which brought on the recent crisis. Nobody’s
\nclearing a very high bar.<\/p>\n

Second, whatever Obama signs into law will be modest given the scope
\nand severity of the crisis, nothing like the New Deal reforms. No bank
\nwill be broken up, no government agency punished, no Wall Street
\nexecutive denied his bonus.<\/p>\n

The thrust of both the House and Senate bills is to repair and
\npreserve the current system rather than reform it root and branch. “The
\nsystem isn’t changing that much,” Douglas Elliott, a Brookings
\nInstitution scholar and former investment banker told National Journal.
\n“There is a hope, I think, that everyone is going to do better.”<\/p>\n

Among the first to exhibit better behavior were the committee
\nchairmen who drafted the Senate bill, Dodd and Lincoln. In a break from
\nthe Washington norm, the reform legislation got stronger, not weaker, as
\n it wended its way through the Senate. This was especially interesting
\ngiven that both senators spent years doing Wall Street’s bidding. Their
\nabout-face added drama to the proceedings. That no senator in either
\nparty was willing or able to thwart them only made the story better.<\/p>\n

The third point likely to be underplayed is that this unusual dynamic
\n owes nothing to the integrity of the senators and everything to the
\nanger of the American public. Dodd and Lincoln, both facing wrathful
\nvoters and long odds on reelection, simply were trying to survive (Dodd
\nfinally gave up and decided to retire — sorry, “depart in triumph”).<\/p>\n

It speaks volumes about the Democratic leadership’s attitude toward
\nfinancial reform that its two toughest bills have both been acts of
\nblatant insincerity driven by electoral desperation. That a few members
\nof the GOP, which would block Mother’s Day if a Democrat proposed it,
\nfelt compelled to go along says as much about the power of an angry
\nelectorate. But that’s really not so bad. Cravenness, it turns out, can
\nbe a force for good. “This bill has been a constant one-upping of people
\n proposing stronger and stronger provisions,” a Senate leadership aide
\nmarveled. “The dirty work of watering it down is dangerous, so it just
\nkeeps moving along.”<\/p>\n

A few big issues remain when the House and Senate merge their bills
\nin the coming weeks. Will the “Volcker Rule” banning federally insured
\nbanks from making risky bets find its way into law? Will banks be forced
\n to spin off their derivatives business? We may soon see for ourselves.
\nSomewhere along the line, someone proposed televising the proceedings,
\nand no one’s summoned the courage to stop them. This is undoubtedly for
\nthe good. Fear and self-preservation aren’t the most admirable
\nqualities. They make for lousy copy. But they do seem to work. The real
\nstory of financial reform is that nobody wants to depart in triumph.<\/p>\n

Joshua Green writes a weekly column for the Boston Globe<\/i>.<\/p>\n



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\nChristopher Dodd<\/a> – United States<\/a> – Great Depression<\/a> – Washington Post<\/a> – Wall Street<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Last week, the Senate followed the House and passed a bill to regulate Wall Street, all but ensuring President Obama another major legislative victory. At moments like these, the Washington press corps drops its adversarial tone and adopts a witness-to-history earnestness. Pronouncements are made about the historic nature of the new law (“The most profound […]<\/p>\n","protected":false},"author":6562,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7],"tags":[],"class_list":["post-581217","post","type-post","status-publish","format-standard","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/581217","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/users\/6562"}],"replies":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/comments?post=581217"}],"version-history":[{"count":0,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/581217\/revisions"}],"wp:attachment":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/media?parent=581217"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/categories?post=581217"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/tags?post=581217"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}