Why the Obama Administration Didn't Leave Financial Regulation to Congress
The New Republic's Noam Scheiber asked an interesting question yesterday: Why, he wondered, was Obama abandoning "Obamaism" on financial reform? The Obama White House has thus far displayed a strong preference for giving Congress a set of principles and letting the legislative branch hammer out the details. That strategy has been consistent across stimulus, health care, and cap-and-trade. But not financial regulation. Here, the Obama administration is offering 85 pages of granular specifics. What accounts for the difference?
Scheiber suggests that "when it comes to financial regulation, the details (and their consequences) are basically lost on 90-plus percent of voters." Maybe. But folks I've spoken to suggest it's simpler than that: Congress has substantial expertise at both the staff and member levels on health reform, spending projects (you could argue that's their core competence, actually), and energy policy. They are totally adrift on financial regulation. After Barney Frank, how many other members even understand the relevant issues? And on a staffing level, how many members have financial industry experts on staff?
All that expertise, rather, is in the federal bureaucracy. It's in the Treasury Department and the FDIC and the Federal Reserve and the Securities and Exchange Commission. The Obama administration took the lead on financial regulation, in other words, because Congress couldn't. And I'd guess that we're going to see exactly how true that is in a couple months, when Congress actually begins debating these details.
(Photo credit: Brendan Smialowski -- Bloomberg News)
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