With
eleven pens for souvenirs, President Obama signed the financial reform
bill in a rare celebratory moment. Significantly, the ceremony did not
take place in the Oval Office but up the block at the Ronald Reagan
building perhaps to signal recalcitrant Republicans that this is a cause
they should sign on to.
It
wasn't clear if he was aware that he was signing up for the a new
volatile phase of struggle to rein in out of control financial power.
The
three GOP lawmakers who voted for the bill receiving a standing ovation from
the largely democratic crowd that watched Obama embrace Paul Volcker
while Elizabeth Warren stood by applauding (before taking her picture
with the former Fed head.)
Warren's
presence didn't make many news stories or the Times photo caption
perhaps because many--mostly bankers and some Obama advisors -- want her
out of the picture permanently. They say Banks need protection too.
Quips David Sirota, "Not to put too fine a point on it, but the new agency is called the Consumer
Financial Protection Bureau, it is not called the Bank Financial
Protection Bureau (as, frankly, you might call the rest of the
government)." She could be appointed right now to head the new consumer protection bureau without approval by the Senate.
But will she?
No
sooner was the bill signed than there were emails from Obama operatives
flying around the country claiming credit for an achievement that
looked unlikely for months, sustained the heaviest Lobbyist attack in
history, and won praise from all the advocacy groups who realized that
while the bill was flawed, rationalized it as the best they could
squeeze out of Congress in this climate.
Republicans
are predicting it will lead to job losses. Minority leader Mitch
McConnel regurgitated a familiar mantra saying, "The White House will
declare this bill a victory. But for millions of Americans struggling to
find work, for millions of small-business owners bracing themselves for
all the new regulations they'll have to deal with, for ordinary
Americans who just wanted to see an end to the bailouts, this bill is no
victory."
(Of
course, there was no reference to the Republicans who initiated the
bailouts, or, of course, the "ordinary Americans want jobs!)
Now,
the businesses that could be regulated under the bill are launching an
effort to reform the Reform bill-- their way--to make sure the rules that
are still to be written will not be too hard on them.
The
Chamber of Commerce and the Business Roundtable have their hatchets out
by continuing the full court press lobbying effort that did force
compromises in the bill. Of course, they position what they are doing
only in the most positive light. "We will work with President Obama and policy makers to ensure that
this legislation is implemented in a manner that continues to promote
sustainable economic growth and job creation," says Roundtable honcho
Larry Burton.
Not
only is this bla bla contrived, but it is flawed in a more fundamental
way because there is no job creation to continue, in large part, because
the private sector is not creating jobs. In fact corporations are
stashing trillions that they are not using for job growth.
You
expect business to oppose regulations on business but the Daily Beast
carried an article suggesting that some savvy Wall Streeters actually
want stricter regulations. Author Randall Lane writes:
"Upon
passage, the standard response was to publicly grumble but privately
rejoice about a bill that could have been far more punitive. But as I
asked around over the past few days, there's been a shift: many on Wall
Street now view financial reform as a wasted opportunity--to make the
rules that govern them even tighter.
They
won't say this officially. They might not even say it to their peers,
in the same way they won't tell others on the desk they really dig Glee.
But privately, one-on-one, the most deliberative Wall Street hitters I
know recognize that they need a system that saves them both from
themselves, as well as potentially capricious regulators. This new law,
while well-intentioned and likely better than nothing, effectively
accomplishes neither."
Lane
argues that, "Wall Street craves--and needs--rules, and the discipline to
enforce them consistently. If left to its own self-interest, Wall
Street couldn't function."
In
this view, the bill was not tough enough even with the many compromises
the biggest firms won to allow them to circumvent the law.
Wall Street's new battleground is over the shape of the rules to come.
The
Washington Post reports, "The SEC is required to issue 95 new
regulations governing a wide swath of the financial sector, dozens more
than the Federal Reserve, the new Consumer Financial Protection Bureau
or other federal agencies. The SEC is also slated to complete 17
one-time studies and five new ongoing reports, according to a tally by
the law firm Davis Polk & Wardwell."
The
SEC does not exactly have a reputation for moving quickly. They missed
Bernie Madoff's ponzi scheme for a decade, but now say they are going
after more cases of corporate fraud in the aftermath of the $550 million
dollar settlement they won from Goldman Sachs. The problem there is
that they are only settling cases, not prosecuting fraudsters.
Progressives
have an agenda too, to strengthen reform. They will be fighting to, in
Zack Carter's buzz words: "Break Up The Banks ... Tax Wall Street
Gambling ... End The Foreclosure Nightmare..." There are also concerns
with the future of the taxpayer billions invested in mortgage lenders
"Freddie" and "Fannie."
While
all this goes on in the foreground, in the background there's panic
about the economy's stubborn refusal to rebound. Ben Bernanke at the Fed
expects unemployment to linger for years. His arsenal of economic
weaponry seems out of ammunition, He is now "unusually uncertain." Huh?
Stress tests of banks are expected to show a capital hole.
When
the six-month extension of unemployment benefits squeaked through the
Senate, there was a sigh of relief among those in need, and cheers from
Democrats who have not been able to move the unemployment needle or
restore confidence in the economy. What happens after six months?
Putting
money in the pockets of consumers will create some bounce, but it
doesn't deal with the deep structural and systemic problems that worry
economists and governments worldwide.
What
they see are 800 insolvent banks, industries shrinking, state and local
governments on the verge of bankruptcy and escalating debt. They see
China rising and the West sinking.
A
million foreclosures are expected this year while in-the-know advocates
like Paul Krugman warn of stagnation and a creeping depression. Others
say a double dip recession is already here. Shrill partisan voices make
it hard for the public to focus on any solutions. So there is no jobs
bill despite a bill seeking Local Jobs For America.
So
far, only a few brave voices are calling for major cutbacks in defense
or inflated intelligence spending as the wars we cannot win continue to
drain us like those knives that leave a thousand cuts.
Many
banks are falsifying their earnings but still considered too big to
fail. My view they are not too big to jail, yet there is no public
pressure from progressives for the prosecution of Wall Street criminals
as I call for in my film PLUNDER.
So,
by all means, let's be grateful for small victories, but we can't
substitute symbolic steps with a real recovery that, every day, looks
further and further away.