The populist politics of financial regulation
The more I think about Dodd's financial regulation bill, the more I think the politics are going to be surprising. Its biggest surprise, for instance, is how much power it takes from the Federal Reserve, and how much it does to make the central bank more accountable to Congress. But Fed skepticism has been much more prevalent among Ron Paul supporters and Tea Partiers than MoveOn.org members. Indeed, the financial regulation plan developed by Barney Frank was fairly friendly toward the Fed. The financial regulation plan developed by House Republicans was not.
Similarly, the Tea Parties have been, in large part, about how much everybody hates the banks. And what do the banks hate? Well, Dodd's plan. "They're just blowing up everything for the sake of change," moaned Ed Yingling, president of the American Bankers Association. When the Tea Partiers turn their attention to this issue, do they turn against the plan or do they turn against the banks? Will they have a "public option"-level priority in financial regulation reform? If they do, my sense is the ABA won't much like it.
The politics of this, in fact, look to be the reverse of the politics of health-care reform. There, Democrats were fairly united with industry actors, but aggressively opposed by the conservative base, and Republicans ended up siding with their base and their electoral prospects rather than with the pharmaceutical industry. The Republican attack has been populist in nature. On this, you could see the liberal and conservative bases largely agreeing, while industry actors join in opposition. The battle lines might cut the establishment (the Federal Reserve, the banks, etc.) from the grass roots more than they separate the two parties. As my colleague Binya Appelbaum reminds me, "populism" referred to a skepticism of elites setting monetary policy long before it became shorthand for a difference between the left and the right.
Photo credit: By Chip Somodevilla/Getty Images
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