Finance Reform: What the Bill Doesn't Do

THOMAS FERGUSON
Ferguson is professor of political science at the University of Massachusetts, Boston and a senior fellow of the Roosevelt Institute. He said today: "This whole business reminds me of the old Bob Hope line: 'You can fool some of the people all of the time and all the people some of the time, but you can't fool all the people all of the time -- and that's why we have a two-party system.' The Republicans opposed this bill almost completely. The Democrats brought in a bill that was critical of some Wall Street practices, and are hyping it now as a legislative milestone of almost Rooseveltian dimensions -- the president actually compared it to the Glass-Steagall Act (which separated commercial and investment backing back in 1933), which is ridiculous.

"The bill makes some marginal changes, but it does not attack the fundamental problems that got us into the disaster of 2008. It just ducks the too-big-to-fail problem. The large banks will continue to dominate the derivatives business, as only portions of that move to clearinghouses or exchanges. In fact, the legislation is going to lock in the positions of the largest banks. At the start of the crisis, the four largest had about 40 percent of all deposits; now they hold something like 56 percent. That will probably only increase, with all that implies for consumer choice. The legislation creates a new council of the regulators, who are precisely the people who failed in the years before 2008. There is a consumer product safety agency that's to be established, but it's in the Federal Reserve, which simply hates consumer product safety. And the auto dealers got exempted from regulation.

"It's easy to understand why Sen. Russ Feingold said he just could not vote for this bill -- but you may get a worse bill under another Congress. The very same Congress that's pushed this bill through at a snail's pace also created the Angelides Commission, which is supposed to inquire into what happened and why. This, of course, is not going to report until after the November elections. And so right from the beginning you knew the folks who were pushing this bill were not serious. I mean, that is to say, if they learned anything from the Commission, they weren't planning to use it in the bill. But they were planning to take in record amounts of campaign contributions and allow lobbyists to go wild offering them the sun, the moon, and the stars."

Ferguson's books include Golden Rule: The Investment Theory of Party Competition and the Logic of Money-Driven Political Systems. See interviews with him on The Real News including one from this week.

DANNY SCHECHTER
Schechter is editor of the MediaChannel.org. His latest book is "Plunder: Investigating Our Economic Calamity and the Subprime Scandal." He just wrote the piece "The Senate Votes on Financial Reform Thursday: What the Bill Doesn't Do," for his "News Dissector" blog.