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Treasury and FinReg

Mike Konczal rounds up the reasons that progressives felt that the Treasury Department was not on their side during FinReg:

They fought the Collins amendment for quality of bank capital, fought leverage requirements like a 15-to-1 cap, fought prefunding the resolution mechanism, fought Section 716 spinning out swap desks, removed foreign exchange swaps and introduced end user exemption from derivative language between the Obama white paper and the House Bill, believed they could have gotten the SAFE Banking Amendment to break up the banks but didn’t try, pushed against the full Audit the Fed and encouraged the Scott Brown deal.

[...]What is worth noting is that they always end up leaving their fingerprints on the side of less structural reform and in favor of the status quo on Wall Street. These are some of the many ideas that progressives brought to the table, and there’s a documentable trail of each one of them being opposed and fought against by the administration. This is not to say that the administration is against reform. But it is to say that the problem I see is that they think what we had was a crisis where regulators didn’t have enough powers, not that the financial sector in 2007 was too dangerous and too risky. They did push hard for the CFPA, and I am thankful for that.

I'd only add that I don't think this was really a progressive vs. non-progressive debate. It's more about whether you preferred Wall Street reform or financial regulation reform. The Democrats made a concerted effort to rebrand it "Wall Street reform," as that polled better, but that really wasn't their approach. Instead, the majority of the bill was about strengthening and reforming the regulatory structure, and they opposed provisions that would take discretion from regulators and enshrine clear limits on Wall Street's behavior the law.

By Ezra Klein  |  July 8, 2010; 12:40 PM ET
Categories:  Financial Regulation  
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Comments

So if the Dems reformed the regulatory structure but not Wall Street behavior, was this because they were bought off by the banking industry's lobbyists? I think their calling it "Wall Street reform" while not actually reforming Wall Street is the giveaway.

Posted by: randrewm | July 8, 2010 2:57 PM | Report abuse

The USA should Demand a bigger cut of the Wall Street Derivatives market. A $600 Trillion Market should be Taxed Higher to Regulate Risk and Reward and use the money to fund Unemployment.

That's only fair. Of course Poor Wall Street babies will cry; just because they caused the Global Economic meltdown and the loss of Millions of Jobs, included 8 Million in the USA, as well as Millions of Homes, and Businesses, We should pity them. We should forgive and reward them while families are in poverty, homeless and starving because of their actions, while they give themselves Billions in Bonuses. Poor little Babies.

Wall Street should not have the ability to manipulate the Price of Oil, Wheat and other commodities. That gouges Consumers and hurts legitimate businesses such as Airlines and Farming companies that need stable prices. When Gasoline reached $4~5/gallon at the Pump it was not to due supply and demand; it was Energy derivative speculation of Banks and Investment Funds.

Companies can still trade in Derivatives, they just have to use their own profits to do so, and not my FDIC insured savings and Taxpayer funded Federal Loans at preferred rates. Wall Street places everyones life savings and our Economic and National Security at risk when gambling in a $600 Trillion Derivatives market.

Posted by: Airborne82 | July 8, 2010 5:43 PM | Report abuse

"The Democrats made a concerted effort to rebrand it 'Wall Street reform'... but that really wasn't their approach."

There was an AP poll out the other day that had 64% of Americans saying this won't change much of anything. Which it won't. It's not far from the original blueprint, which even libertarians were calling an embarrassment.

People aren't stupid; they know this is totally weak sauce. (For all Wall Street's whining about persecution, 80% of this country still blames the banks for the mess we're in. Deal with it, oligarchs... or move to some other country already.)

Posted by: jes7 | July 8, 2010 10:11 PM | Report abuse

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