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Feingold vs. FinReg

Kevin Drum and Jonathan Bernstein are giving Russ Feingold some grief for not supporting the financial regulation reform bill. In the specific, their argument makes sense: The bill is being made somewhat worse because Feingold refuses to support it. On the other hand, it's understandable why someone wouldn't support this bill.

Take one of the issues at the core of the reforms: The amount of capital financial institutions need to hold to protect themselves from crises. Is the bill good or bad on this? Well, it's hard to say, because the bill punts the capital requirements to regulators.

Or take another issue: The government's authority to take down a major bank that might fail and cause panic in the system. In order to use this authority, the Treasury Department, the FDIC and the Federal Reserve must all agree that the bank needs to be taken down. Then, three bankruptcy judges must ratify their decision. It is hard to believe that this authority will ever be used in time to prevent panic. As a financial reporter friend of mine noted, this is oddly reminiscent of the layers of redundancy we erect around nuclear weapons and, tellingly, those redundancies are there to prevent the weapons from being launched.

Or take the all-important regulators who'll make these decisions. I spoke with Eric Patashnik yesterday, the political scientist who wrote "Reforms at Risk." The reforms that fare worst over the long haul, he said, are those that choose to layer new regulatory bureaucracies atop old ones rather than simply creating new, clean structures. The Dodd bill retreated from its initial and radical reorganization of the regulatory landscape and now layers a systemic risk regulator atop the Federal Reserve.

I don't want to go too far with this. The bill is an improvement on the status quo. Bringing over-the-counter derivatives into clearinghouses and onto exchanges is a major victory, and so, too, is the establishment of an agency to protect consumers, the end of an unregulated shadow banking market and much more. So in that way, I get the critique of Feingold. But I also get Feingold's critique of the legislation. If I had to come down on this, I'd say his initial votes against the legislation made sense, but at this point, it's time to drop the procedural votes against it. If he wants to vote no, he should vote no. But he should vote against the Republican filibuster.

By Ezra Klein  |  June 30, 2010; 1:20 PM ET
Categories:  Financial Regulation  
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Where do these guys get the idea that voting against YOUR OWN LEADERSHIP ON PROCEDURAL ISSUES is not the way to show your disapproval FOR THE SUBSTANCE OF THE BILL!

Fingold and Nelson and whoever else are entitled to vote against the legislation, if they want to. For them to KEEP A VOTE FROM HAPPENING BECAUSE THEY WOULD LOSE, is very much like a little child taking his ball and going home when s/he doesn't get his/her way. "If I don't get what I want, then nothing happens", is not the way to run a legislative branch of government.

Posted by: srw3 | June 30, 2010 1:46 PM | Report abuse

the bill is becoming some what worse because democrats don't care what they pass! They just want a bill to pass (kinda like HCR)it doesn't have to do anything but pass. Feingold has some princible's here, but libreals don't care about those do they.

Posted by: obrier2 | June 30, 2010 1:48 PM | Report abuse

@OB2: Feingold has some princible's here, but libreals don't care about those do they.

I care about the principle of majority rule. The irony of this is that it is the republicans in the senate that are keeping the bill from being more to Feingold's liking, not the "liberals" in the senate. By filibustering the bill, Feingold is voting with the people that kept the bill from being more to his liking.

Posted by: srw3 | June 30, 2010 2:12 PM | Report abuse

Ezra, I've seen people claim that Feingold wasn't involved in the conference negotiations the way Cantwell was. Thus, the idea that he's holding out to make the bill better doesn't hold because he wasn't doing anything to make the bill better.

Can you comment?

Posted by: lol-lol | June 30, 2010 2:45 PM | Report abuse


Have you discussed whether FeinGold should vote for cloture on FinReg with any former Journolist members?

Posted by: JakeD2 | June 30, 2010 2:59 PM | Report abuse

@JD2, thread jacker extrodinaire. Are you jealous because Ezra has friends in the business?

Posted by: srw3 | June 30, 2010 3:07 PM | Report abuse

I fail to see how we are more likely to avoid another meltdown with the status quo, as opposed to an admittedly flawed bill that at least does bring more transparency to derivatives, requires banks to have more capital, limits propriety trading at least somewhat, and includes better wind-down authority. Plus it has the consumer protection bureau and lets merchants give people a break for using cash instead of plastic.

Only in a parallel universe is a better bill going to pass after the November elections, when the GOP picks up 2-3 Senate seats and maybe 15-20 House seats. Or Worse.

Posted by: Mimikatz | June 30, 2010 4:18 PM | Report abuse


No, I am simply asking a simple question.

Posted by: JakeD2 | June 30, 2010 4:34 PM | Report abuse

Seeking transparency as to Ezra's -- and other "reporters" -- bias and coordination. Kevin Drum has now admitted to being a member of Journolist. Was Jonathan Bernstein?

Posted by: JakeD2 | June 30, 2010 4:45 PM | Report abuse

You know who else was on Journolist? Hitler.

You heard it here first.

Posted by: CaptainNoble | June 30, 2010 5:13 PM | Report abuse

ADOLF Hitler, who killed himself on April 20, 1945 (over 60 years before Ezra even started Journolist)?

Posted by: JakeD2 | June 30, 2010 5:24 PM | Report abuse

Do you also think that Elvis Presley is alive?

Posted by: JakeD2 | June 30, 2010 5:30 PM | Report abuse

Re taking down a bank and preventing panic, bankruptcy judges in business cases make immediate decisions all the time upon case filing so I dont really think that will be a time impediment in a panic situation.

Posted by: gregspolitics | June 30, 2010 5:41 PM | Report abuse

Re Nelson, Feingold and supporting filibusters.
The problem is that Senators, the media, and the public have now internalized this idea that it takes 60 votes to pass something in the Sentate rather than that it takes 60 votes to conclude debate. Thus, votes to conclude debate are reported as if they are votes to pass the legislation.

Posted by: gregspolitics | June 30, 2010 5:45 PM | Report abuse

JakeD2, with every JournoList comment you make, you seem ever more the fool, though perhaps you're approaching the theoretical limit of foolishness by this point.

And as stupid as it is to expect that you have a right to the private conversations people had on JournoList, the idea that Ezra should disclose any private conversations he's had with *former* members of JournoList now that it's closed down is some kind of new stupidity plateau. You think Ezra should tell you if, on his way the the bathroom at a bar he passed Matt Yglesias, said, "Feingold, man. You know?", to which Yglesias said, "I know, right?" If you answer is yes, the congrats, you've pushed the theoretical stupidity limit down further.

Posted by: MosBen | June 30, 2010 6:31 PM | Report abuse


Are YOU now, or have you ever been, a member of Journolist?

Posted by: JakeD2 | June 30, 2010 6:38 PM | Report abuse

Sorry, but I disagree. It is time for Democrats to stop voting on watered down bills. If "the just say no" party wants to stop bills like this and like single coverage health care, make them accountable by voting for good bills. Kucinic on health care should have stood firm and Feingold should stay the course.
Let the voters see who really is stopping bills for the good of the country in obeisance to their corporate masters.

Posted by: lostinbago | June 30, 2010 7:59 PM | Report abuse

Oh man, JakeD2, I just noticed your identical post in the other thread. Maybe you just wanted to post it here also to make sure I saw it, but I must say that the repetition makes me think that you're serious. I was pretty convinced that you were being funny (and it was funny!) and it actually made my estimation of you improve, so I hope my first reaction was right.

Posted by: MosBen | June 30, 2010 8:32 PM | Report abuse

I just waiting for the Republican claims of a relationship between Journolist and Acorn. Just a matter of time...

Posted by: jp1954 | July 6, 2010 12:52 PM | Report abuse

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