Get Ready for the Next Rumble

By Dan Froomkin
11:50 AM ET, 02/ 3/2009

The question of how to reshape the nation's collapsed financial system hasn't been a big political issue thus far -- in part because the Obama administration has yet to make its intentions clear.

But Peter G. Gosselin writes in the Los Angeles Times that a big partisan battle may be ahead.

"The administration is under mounting pressure to deploy hundreds of billions -- perhaps trillions -- of new dollars to shore up financial firms into which the government has already poured a fortune. Analysts say the only way to make such a politically unpopular step palatable is for the new president to explain what he'll do to ensure the problem never happens again.

"That means a return to the kind of regulatory system that Wall Street and economic conservatives fought to dismantle going back to Ronald Reagan's presidency and continuing through that of George W. Bush -- or something even more stringent....

"Democratic and Republican appointees to a congressionally created panel overseeing the government's $700-billion financial bailout issued drastically different accounts of what needed to be done to keep the nation's banks and markets from veering off course in the future.

"On one side, the Democratic majority, led by Harvard University bankruptcy expert Elizabeth Warren, called for new regulatory structures as sweeping as any since the Great Depression. The framework would be likely to transform how Wall Street does business....

"On the other side, the group's GOP minority suggested that about all that's needed are stricter standards for mortgages and streamlining existing agencies. It strongly implied that the country's financial problems stem mainly from too much, not too little, regulation."

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