My fellow blogger Ben Hoffman made this comment to an earlier post.
Republicans appear to be more “beholden to Wall Street” than the Democrats since they’ve fought all efforts to rein in the abuses.
I think that’s a good way to put it. The Democrats are beholden to Wall Street, but the Republicans may be more beholden to Wall Street. But on questions of interest to Wall Street the parties are more alike than they are different.
Barack Obama and Joe Biden signed on to President Bush’s TARP bailout plan, as did John McCain and Sarah Palin. Once in office, President Obama continued with President Bush’s economic team, reappointing Ben Bernanke as chair of the Federal Reserve Board, and moving Timothy Geither from the White House to Secretary of the Treasury.
Congressional Democrats did not consider legislation to break up the “too big to fail” banks. They did not consider legislation to control risky speculation with federally-insured deposits, to restore the barriers between savings and investment banks, to put a minor tax on stock market transactions or to set requirements of bank reserves—any of which would have reined in the Wall Street speculators.
Instead they supported the Dodd-Frank bill, introduced by Senator Christopher Dodd of Connecticut, a center of the insurance industry, and Rep. Barney Frank of Massachusetts, a financial center, which creates a new layer of financial regulation under rules to be determined.
This could be good, if the regulators are wise and firm, and are not thwarted by Congress or the incumbent President. How likely is that? How likely is good policy to last from one administration to the next? In the years prior to the financial crisis of 2007, the government did not use the regulatory authority it had. A simple statement by Fed chairman Alan Greenspan that real estate prices and stock prices were overvalued might have burst the bubble before it grew too great. Will a new regulatory body be any different?
The influence of Wall Street banks goes beyond Wall banking regulation. The bi-partisan priority of financial austerity over fighting unemployment reflects the influence of bankers and financiers, which insists of financial probity in everyone except themselves.
It is true enough that there is a difference between the leadership of the two parties. The Republican leadership is actively hostile to labor unions, minorities and the working poor; the Democratic leadership merely puts the interests of the big financial institutions first.
I am perhaps overly critical of President Obama. When I voted for him, I hoped he would halt or at least slow down the country’s backward slide, and my disappointment makes me perhaps overly bitter.
The influence of the wealthy elite on government is a systemic problem. It is more than the decisions of a single individual. The pattern of the Obama administration followed the same trajectory as President Clinton’s and President Carter’s—populist promises and corporate policies. The influence of bankers and financiers on government policy is just as great or maybe greater in Europe than in the United States. If things always happen the same way no matter who is in charge, the problem is in the system.
Click on The Hoffman Report for Ben Hoffman’s web log.
Click on Business, not public, driving nation rightward for the post Hoffman commented on.
Click on Sheila Bair’s Exit Interview for a New York Times article about the outgoing head of the Federal Deposit Insurance Corp. which shows the continuity between the Bush and Obama administrations.
Click on Dodd-Frank Wall Street Reform and Consumer Protection Act Wiki for Wikipedia’s explanation of the Dodd-Frank bill.
Click on The Billion-Dollar Bank Heist for a Newsweek report on financial lobbyists efforts to shape the rules by which the Dodd-Frank bill will be implemented. This was completely predictable.