Apologies for forgetting I was chatting, starting 15 minutes late, and ending 20 minutes early. JV performance on my part.
Reston, Va.: Please explain to me why it's a bad thing that Goldman and its lobbyists are "frozen out" of the discussions surrounding financial reform. Not a sarcastic question -- I'm really puzzled.
Ezra Klein: It doesn't seem to me that that would necessarily be bad. On the other hand, it doesn't seem to me that Wall Street really has been frozen out on financial reform. Rather, I think they had a lot of input into the basic approach of the bill (which focuses on regulators and their power rather than Wall Street and its practices), and now that the debate is more public, they're not being able to control the politics and so are getting blindsided by things like Blanche Lincoln's derivatives proposal.
Seattle, Wash.: How worried should people be about Republicans offering poison pill amendments? I'm not sure how worried I am considering that a lot of the GOP rhetoric is anti-Wall Street populism (the opposite of their fundraising strategy) and that sort of rhetoric doesn't translate into "bad" amendments as much as I'd fear.
Ezra Klein: Depends on the amendment. I'd guess that the focus here would be Fannie and Freddie, but it's hard for me to think of an F&F amendment that Democrats couldn't vote against. In general, I think the whole poison pill strategy is overrated, as we saw in health-care reform.
Mont Rainier, Md.: Mr. Klein, Are we really going to do serious financial reform, or are we going to do "It looks good on paper to the average Joe but Wall Street knows how to get around it" financial reform? And what role can the public play in this at this late stage?
Ezra Klein: I don't think the average Joe can even read the paper here, and that's not a commentary on the average Joe. As for whether Wall Street can get around it, the question is not whether they will, it's how long it'll take. Sen. Ted Kaufman says that rules have a "half-life," and the question is simply how long that half-life is. I think that's right, and as a general rule of thumb, the more we're dealing with regulator discretion, the shorter I think that half-life will be.
Washington, D.C.: If after debate ends on the financial regulatory bill, the Democrats don't have the 60 votes needed to invoke cloture, should they use the opportunity to highlight the filibuster? Should they pull out the cots and make Jim Bunning dehydrate himself? In other words, is the legislation popular enough for the populace to be outraged at Republican obstructionism?
Ezra Klein: That's certainly what Democrats implied yesterday, so I wouldn't be surprised. But it'll have to do with how the politics of the issue feel when it's time to vote.
Job Creation: Ezra, I have been asking this of your colleagues in other chats and I still cannot find a good answer. How can the government create private-sector jobs? There is a lot of talk about how the president needs to create jobs, but no one says how. A payroll tax holiday, is that going to get people hired? Republicans lauded about how the newly elected governor of Virginia was all about jobs and since his election, no one has done an analysis or report about how many jobs he's actually saved or created. What are your thoughts on job creation policy either on the state or national level?
Ezra Klein: The government can create private sector jobs by increasing the economic benefit that private-sector companies derive from hiring a new employee. They could do that directly by paying companies to hire, as in a tax cut. They could do that by increasing economic growth or consumer demand, which is what stimulus has done. And then there's the Federal Reserve, which can use monetary policy to influence growth and hiring.
Reston: Is Glass Steagal part of the reform bill? Why or why not?
Ezra Klein: Nope. And presumably because the banks didn't want it, nor did a sufficient number of legislators. At least as of yet. I think there will be a Glass-Steagall amendment that gets offered.
Wage world: I certainly would like to see tougher financial regulation. But one of the opponents of the current bill made this point: Citibank and Goldman Sachs, among others, are supporting it. How tough can this bill be if those guys like it? How can this bill be good for the average worker if it's good for Goldman Sachs?
Ezra Klein: Citigroup is currently owned by the government, so they're a weird case. As for GS, I don't know that they're supporting it. There are things they like and things they don't like, and they're under so much congressional scrutiny that they don't want to anger anyone unnecessarily. But it's not my impression that GS's lobbyists are kicking their feat up on the desk and taking it easy.
Helena, Ala.: Do you believe there can be real financial reform that will benefit the nation as a whole without first addressing campaign finance reform?
Ezra Klein: I think campaign finance reform would make this sort of thing a lot easier.
New Mexico: "I don't think the average Joe can read the paper here" concerning financial reform. -- What is that supposed to mean. The average Joe out there is a lot smarter and informed than you seem to give them credit for and such remarks are really out of place.
Ezra Klein: Nice job deleting the second part of my sentence. Neither the average Joe nor non-lawyers can really make sense of legislative language. You can give it a shot, and I often do, but it's very difficult to comprehend, and by design.
I've often said that the single best thing the government could do for transparency would be to mandate a "plain English" bill alongside the legislative language, which is how the Senate Finance Committee works. That way, people actually could understand this stuff. But no, I'm not interested in letting unnecessary complexity stand because there's some rule that we can't admit that bills are hard for average -- and non-average -- Americans to read.
New York, N.Y.: What do you think of Sen. Blanche Lincoln's derivatives bill? Do you agree, as most experts (including the Fed) seem to, that the infamous Section 106 in Sen. Lincoln's bill is a bad idea?
Ezra Klein: I really only know what the experts tell me on this, and more of them -- and I'm talking about reformers here -- seem worried about it than I'm really comfortable with.
Jersey Shore: Hey Ezra, dropping resolution authority -- or at least the $50b industry-funded account -- seems like a BFD. Is resolution authority preserved in some way? Might the $50b be resurrected somehow?
Ezra Klein: The $50 billion isn't the same as resolution authority. It just helps pay for RA so that it's not coming out of the taxpayer's wallets. Now that it's eliminated, that money will have to be recouped after the fact, which seems iffier to me.
Dallas, Tex.: I have a question regarding the Finance reform. Does the proposed legislation differentiate between using derivatives as insurance and using them as speculative bets? i.e. if you are going to buy a put, do you have to be going long on the same asset (Like a farmer would do)?
Ezra Klein: There are various proposals on this but the consensus seems to be that if you're a non-systemically important company using derivatives to hedge your risks, you're exempt from some of the regulations. If you're a systemically important company or a financial firm using derivatives to make speculative bets, you're on the clearinghouse and exchanges.
Albany, N.Y.: I think I understand why there is no Fannie or Freddy in the bill but I have heard at least one Democrat say that a separate bill dealing all or mostly with those firms could come up this session if a finance bill passes. Is that realistic or is it "wait till next year" or farther away.
Ezra Klein: I don't know. The idea is to do another bill, but I haven't heard anything concrete on timing.
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