Everybody's talking about it, so why not us!? Obama's signing of the financial reform bill has to be the biggest news in America this week; aside from Lindsay Lohan going to jail (lame). Ok, so maybe it wasn't the biggest news, after all, everybody knew it was going to pass. But it is very significant because it marks the second big reform that Obama has achieved in his presidential term. How big of a reform is it? if you ask me, not that big. The biggest points that the bill addresses are the following: emergency lending from the Fed, bank equity (trying to separate deposit banks from wall street banks), and the consumer protection agency. These are basically three major ideas: (1) no more bailouts (2) reduce bank greed (3) protect main street from evil wall street. How effective will these proposals really be? In my own investigations, I have found that point number 2 is probably the most watered down of them all. The Volcker rule was supposed to really crank down on bank activity, but as it made it to Senate (where progress goes to die, haha) it was loosened. The protection agency is another, interesting story. It feels a little out of place in the Fed and a lot of its provisions feel to me like they are just assurance by the government that the consumer "is not alone". The biggest test will be, are these regulatory powers of the bureau significant? and if they are, will they really have a big impact? Overall, most importantly, is this bill really going to prevent another financial crisis??
Personally, I feel like this bill is the equivalent of reducing the speed limits to stop accidents. Sure, many accidents are deterred by the speed limit, but still accidents will happen. It's kind of naive to think that we have the power to prevent bad economic times. It's almost as if saying that we will prevent bad things from happening in life. Sure, one cannot stretch this analogy, we do have the power to alter the severity of bad times. We do have the power to prevent really bad economic times as opposed to just bad times. Thus, it is comforting to know that this recession wasn't a depression (which it could have been), thanks to the changes we made after the depression. In that case, that was like placing seat belts in cars to avoid deaths in accidents - a major step indeed. I find that the general doom and gloom during this recession is a little misplaced. Personally, I have not found a job since I graduated, duh, things are bad. But the truth is I can find a paying job - as I did. It's like in that post from Cobra The American Dream Apparently Still Requires Work, the kid in that article found a job, it just wasn't the job he liked. What else is to be expected from bad economic times?! The important thing is that there are at least some jobs to be found. What is our unemployment rate? It's less than 20% by a lot! Sure we have doubled our unemployment rate and that sounds pretty bad, but again, what do we expect?
Either way, back to our Financial Reform Bill. The private equity folk are not going to be happy with this legislation, but they should take a chill pill. Just because bank activity is no longer going to be free of rules does not mean that America's economic future is dim. Seriously, let's face it, this bill is not threatening to Wall Street and they know it! this is exactly why the bill was not great news and why it's passing was not able to send stocks tumbling (something that, allegedly, Bernanke was able to do single handedly on thursday, by just saying "economic recovery will be hard"). To be honest, that this bill is not so restrictive is good, because even though our instincts make us want to choke Wall Street, it really isn't the right way to apply punishment. We do want a successful financial system and we don't want to cripple it with regulation so that we lag behind economically when we do recover - that would not be progressive! As Bernanke said, economic recover will be hard, but we have to believe in it. Many questions remain unanswered in the reform package: what happened to regulating Fannie and Freddie? what about non-bank institutions? Like the Healthcare legislation, all we know right now is that "we'll see".
Much like the Healthcare bill, we are left with a better understanding of what Obama's progressive reign will be like. The two bills have been watered down versions of what they promised to be. I'm sure many people on the left will cast judgement on Obama: either failed progressive promises or "he was a centrist after all". But this is change we can believe in. Let's face it, Obama didn't pass either bill, congress did! That these bills are watered down is a reflection of how conservative America really is. I mean, what are these "centrist" democrats? they are just borderline democrats! they might as well be "moderate republicans". This is who people voted for and the majority are conservative. That Obama needs to be pulling republican strings and "convincing" these non-democrat democrats to be voting for bills, in a supposed democratic congress, paints a sad picture for progressive policy. As financial reform passed, the energy bill died, what are we to expect after November when the congress is no longer controlled by democrats? Let's face it, America doesn't like reform. And the reason for that is our lack of education reform. Conservatism thrives where education lacks. Now that we're done helping people get insurance and getting back at Wall Street, it would be a good thing for progressives to try to solve their conundrum and do something about our kids: let's now, finally, please focus on education! This issue is just as important as the economy - if not more.
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