As always, David Waldman has the best introduction to what’s going to happen this week in Congress. At 5pm the Senate will have a cloture vote to end debate on whether to have a debate on S.3217, the Restoring American Financial Stability Act of 2010. No one knows whether this cloture vote will succeed.
Typically you don’t see the Majority Leader moving things to the floor without some inkling that it’s going to work out in the end. At least not all that often. But the Senate is a little different from the House in that respect, since moving for reconsideration of a vote is a much more routine practice there. Senate Democrats also likely think this particular issue breaks down fairly well in terms of putting pressure on the Republicans blocking reform, such that repeated attempts at invoking cloture won’t be seen so much as a failure to lead as an illustration of Republican intransigence on behalf of public enemy #1: Wall Street tycoons who love to rip ordinary working people off and then wallow naked in their stolen retirement funds.
If the Democrats and the president were willing to frame the argument in Waldman’s style, this wouldn’t even be a fight. But most Dems and the president seem to lack the will to frame this is as an all-out battle of the people vs. the Wall Street tycoons. This allows the Republicans to muddy the waters by suggesting that the reforms don’t go far enough in breaking up the big banks. Consider Ranking Member of the Senate Banking Committee Richard Shelby’s performance yesterday on Meet the Press.
SEN. SHELBY: We’re going to continue to work today, as Senator Dodd said. I think we’re closer than we’ve ever been. And will we get a bill by tomorrow? I, I doubt it. I would always hope so because there’s so, so much involved. But I think we will get a bill. If the Democrats want a bill and will give us some things that we think that are substantive in nature, like make the “too big to fail,” send a message that nothing is too big to fail in this country and tighten up the language. There’s some flexibility in the language there that we’re talking about is–and…
…SEN. SHELBY: We need to tighten that up to make sure that it doesn’t happen. The message should be, unambiguously, that nothing’s too big to fail. And if you fail, we’re going to put you, put you to sleep…
…SEN. SHELBY: Well, that’s a, a good question, and that’s one that Dr. Volcker’s talked about for years. And he says if you’re too big to regulate, maybe you’re too big to, to exist, in other words, because you will cause systemic risk. Being big, in my judgment, is not necessarily bad. But it’s bad, bad when the perception is that the big is going to be bailed out and the small are going to be gobbled up by the regulators.
See a theme? So, the Republicans are suggesting that the bill to address systemic risk arising from failing firms that cannot safely be allowed to go bankrupt doesn’t address that risk at all. And, therefore, they’re going to filibuster it. The Democrats are not facing the charge that they’re being too tough on banks, but the opposite. So, with no pushback, they should be free to take shots at the most unpopular people in the world. But, for some reason, they want to be honest and say that the reforms are actually quite modest and not seen as all that unreasonable by most people on Wall Street. This isn’t how you get credit for taking on the banks. The Dems don’t have to be dishonest to point out that they’re trying to fix it so the evil greedy banksters can’t screw up the economy again (at least, not in the same way). Get tougher with these rogues.
Not sure why people are divided on regulating derivatives. Odd result:
Doesn’t make sense to me.
I wonder if some of the 41 percent want more than regulation of derivatives and, like me, favor an outright criminalization of the kind of derivatives ShittyGroup and the rest used to rob us blind.
The wording of the question might also turn people off. They already don’t really know what derivatives are, but you’re now asking if Big Government get involved with new red tape for something even they don’t understand? Goes against the dogma for many.
But if it had been asked if “all derivative trades be registered in a publicly accessible (regulated) market where everyone could see them,” more would have been for it.
not to be a dick, but maybe the reason “the president seem to lack the will to frame this is as an all-out battle of the people vs. the Wall Street tycoons” is because Goldman Sachs was his number 2 campaign donor. Also on the list: JP Morgan, UBS.
And then there’s this:
And isn’t Goldman a really big contributor to the Democratic party as well?
I’m not sure if it’s a matter of will at all.
Disagree. I still think Obama made a bigger deal out of lobbyists during the campaign than he should have. Maybe that’s what gave him the edge over Hillary, I don’t know. However, while money plays a part in some ways, I’m more with digby on this. People’s views are people’s views, and ideology supersedes money in most cases.
It’s just not Obama’s style. He’s like me: he hates populism and just likes the facts on the table. I understand that’s not necessarily a good thing in politics, especially when you’re dealing with these Neanderthals on the right. There’s just something there in our modes of thinking, I can’t describe it. It’s why I hate populism, it doesn’t appeal to me at all.
Nonetheless, he needs to adopt a populist mentality, pronto, even if it’s not in him. Fake it. I don’t care.
I don’t know what your aversion to populism is. It seems too generalized to me. If you dislike hyperbole, I guess I understand a fealty to fairness and truth. I share that. But if it is substantive, then I don’t get it. Why shouldn’t we vastly reduce economic disparity? Why shouldn’t we help workers organize? Why shouldn’t we devote a much bigger percentage of our GDP to investment in people and their potential?
1.) The hyperbole needed. I like the facts on the table, and hyperbole destroys any honest conversation. This is why I understand the need for populism in this climate, even though I don’t like it. I hate having conversations with my Republican friends, hearing them call Obama a socialist. It’s god damned annoying. Not just because it’s false, but it’s like the supporters of the party don’t want honest dialog. The only people I can have honest conversation with are libertarians, and on economic issues, they’re off of their rocker.
2.) I DO want to reduce the economic disparity, but getting the public all enraged and “punishing” Wall Street isn’t how I want to do it. Higher taxes for the rich? You bet. Closing loopholes? Solid. Regulating the fuck out of the banking and finance industry? Yes.
However, I do NOT want to take a tomahawk, using your words, to the Street.
It’s more of me being a wonk and technocrat. I don’t want to work the public into a tizzy just to enact reforms that end up hurting them. It’s like with people getting all worked up with corporations. Yeah! Higher corporate tax! Punish them! It’s not appealing because not only will a lot of populist measures in the form of law end up hurting the people, but because of the misleading nature of it.
Like, when Barack Obama said he didn’t want to disparage the banksters from making their money. I thought that was a stupid ass thing to say. However, on substance, I didn’t have anything to disagree with him about.
You want to reduce the economic disparity, but don’t want to disparage the bankers for taking all that money? Cognitive dissonance rears its head. As long as Americans keep believing the crap about meritocracy and the deservingness of the obscenely rich, there will be no reduction in disparity.
Facts do not demolish embedded and toxic mythology. They need context that includes their emotional meaning. If facts sufficed for much of anything we wouldn’t need judges, juries, or politicians — their work could be done by fact-sifting computers (as laid out in innumerable science fiction stories). If facts sufficed for understanding much of anything we wouldn’t need fiction or drama or poetry.
You seem to think populist rhetoric = lying. I don’t see the lie in urging “taking a tomahawk to the Street”. Piling on more regulation will not change the underlying culture that grew this disaster and imposed the meritless oligarchy under which we now live. Personally I think real change will happen only over the jailed or dead bodies of some bank CEOs, and the seizure of a lot of ill-gotten assets.
Seems like your real objection is not to populism, but to the call for revolutionary change that it says is needed. I think we’re way past the point where anything less can suffice.
Hey, I’m not a believer in the American Dream. I’ve always believed it to be a lie, and I don’t think it’s ever been realized; not when it was first thought up, and certainly not now.
So look. Do I think their salaries are ridiculously obscene, especially given that a lot of them aren’t even operating under the need for success (AIG)? Certainly. However, I also don’t support controlling what they can earn. The change requires change in culture, not punishing them; you made a point of that in your first paragraph. Americans are still in some bubble that “some day I could be one of them!” We both know that’s a lie. This is a club, and we’re not in it. It also requires higher taxes, as our tax rates are ridiculously low.
Like Blanche Lincoln’s derivatives bill. That is a result of populism in policy. There’s some to like, there’s stuff not to like. However, there are some ridiculously horrid things in it that make me want to outright reject the bill unless they’re removed.
Oh, and I know no one will really see this…but Yglesias agrees with me:
http://yglesias.thinkprogress.org/archives/2010/04/driving-a-hard-bargain.php
well, Goldman’s money is good no matter which party we’re talking about. No doubt about it. But I think that gets to the actual weakness of what it is possible to pass. I’m talking about the politics. And Goldman has less influence over that. As I see it, the president wants to convince people that he’s crafting sensible legislation, not some tomahawk against Wall Street. And, really, that is what he’s doing. He’s passing reforms that are very much common sense that even Wall Street mostly recognizes are needed and will actually benefit them for the most part, even if they cut into their derivatives profits. So, he doesn’t want to sell this as some populist revolt because that isn’t what it is. But his honesty is getting in the way of getting credit for doing something sensible. He’s still going to be called a control-freak socialist. He should make sure he puts the Republicans on their heels and give the impression that he’s making Wall Street squeal a little more than is actually the case.
Bam, you’ve got it. As you said, Wall Street SHOULD be in favor of these reforms because a stable financial market is in their best interest. I still don’t think they’re going to cut their noses off to spite their faces over derivatives profits, but they haven’t always had enough foresight, eh?
The one area where I think they’re having influence, though, is that $50 billion draw down fund. The Republicans opposing that? That’s the Street talking.
Obviously they didn’t make all their undeserved money on a stable market. Quite the reverse. They promoted worthless securities and then made billions betting against them. You can’t do that in a stable market. A stable market may be in the best interest of real banks, but is anathema to the casino where the swindlers operate. The banksters have had perfect foresight: they set up a con and knew exactly how it would play out. Does it really look to you like the honchos at Lehman, Wamu, and the rest of the “failures” are suffering? Really?
Meh. Sure, some bankers bankrupted their companies and still have their jobs, but what really happened is that Goldman outsmarted them all. And even they didn’t have perfect foresight. They had enough to create a hedge.
that’s certainly true, as far as the policies go.
but then you run a few risks: first of all, there’s no shortage of hypocritical wingers who will point out that the Democrats have benefited from Goldman’s largesse; and no shortage of right-wing media that will amplify that message. On top of that, if the reforms don’t have teeth, you run the risk of blowback there too: “the democrats talked big, but when it came down to crack down, they were just that: all talk.”
so I’m not sure how much leeway he has to “give the impression that he’s making Wall Street squeal.”
I’m not trying to be a purist, i just think the party’s kind of in a corner, and not necessarily one of their own making, since as you point out, everyone likes Goldman Sachs money.
I really, really wish I didn’t agree Brendan about this, but I do. If they were going to do it, Obama and the Dems in Congress should have come into 2009 banging this drum. These arrogant mofos needed to have their faces put down in their mess as soon as it showed up on the floor and before they got more treats handed out. Barney Frank and Elizabeth Warren wanted to do it, but with Geithner et al in charge, the Obama cooperative tone took over.
The American economy needs a complete re-think. During the Bush years, one third of all profits went to the financial industry. We now know that a lot of their “innovative financial instruments” amounted to nothing productive at best, and fraud and theft at worst. Shadow banking was a big part of this. We need to get back to making actual things in this country, things that require lots of employees to make.
The real banking industry needs to be decentralized. It’s not just that too-big-to-fail means they can blackmail the country whenever they want. It also means that decisions about loans and investments are made by people who do not know their customers and don’t care whether people have jobs in Little Rock, Buffalo and Denver, because they live in San Francisco, New York and Des Moines.
Undoubtedly some of the Dems’ reticence comes from their unwillingness to lose their newfound Wall Street buddies. That’s sickening but true. I think the larger explanation is simply that they’re afraid of bringing the economy further down if they mess with its masters. It’s much like how even the most anti-war politicians crumble to the urgings of the generals once they’re in power.
If the Dems were statesmen of a kind we don’t make in America, they’d be seizing on this chance to challenge some core beliefs about economic distribution and what the “American Dream” was really supposed to be about. They would be well along the road to rebooting the financial system as we know it, making finance once again the necessary but secondary and drab utility that is its proper role.
There are some amendments that Dodd has greenlighted that would limit bank size and increase pressure on derivatives, according to the news. Those are probably where we should be focusing whatever attention and pressure we can muster. That would at least be a holding pattern. The real thing, if it ever comes, will be an epic battle over radical economic redistribution through tax policy and much stronger anti-monopoly enforcement.