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Another health care–like battle is about to hit Washington as President Barack Obama looks to overhaul the financial rules governing Wall Street. Already, Republicans are saber-rattling rather than working to find ways to protect American consumers when it comes to the rules that allowed giant Wall Street banks to create the sort of chaos that led to the worst recession since the Great Depression.
Both Democrats and Republicans failed the public regarding crafting and implementing rules that helped facilitate the financial meltdown. All it takes is one look at the Securities and Exchange Commission (SEC) suit against Goldman Sachs, alleging that the company sold a mortgage investment it knew would fail in order to bet against it and reap huge profits.
Obama and the Democrats have proposed some rule changes that could help and others that are questionable.
According to The New York Times:
"The Democrats' bill, sponsored by Senator Christopher J. Dodd of Connecticut, would give the Federal Reserve oversight of the largest financial institutions, those with at least $50 billion in assets. And it would let the Treasury secretary -- with support from regulators and the approval of a special panel of three bankruptcy judges -- to take over any giant company that posed systemic risk to financial stability, and essentially force it out of business."
The most controversial part of the proposed legislation is the creation of a "resolution authority" to seize and dismantle a financial institution...
"Under the bill, once the Treasury stepped in to take over a failing firm, the Federal Deposit Insurance Corporation would be appointed as a receiver. The Federal Reserve could punish any institution that failed to submit a "resolution plan" -- also known as a living will or a funeral plan -- that would spell out its orderly demise. A $50 billion "orderly liquidation fund," created from fees charged to the largest banks, would help pay for the takeover. The House version of the bill, approved in December, would create a $150 billion fund. The Obama administration does not support such a fund, signaling at least one potential area of compromise."
I'm not sure how a $50-$150-billion ongoing bailout fund would help banks be more responsible, but that is an area Republicans and Democrats should work to improve. A joint committee of Democrats and Republicans helped to cast the measure, so a joint committee should be willing to work out a compromise. Instead, the rhetoric is becoming strikingly similar to the vitriolic health care debate.
"All signs we're getting from the White House is they're not interested in talking," Senate Minority Leader Mitch McConnell said at a news conference. "They're not interested in making a deal with us. They want to jam through a totally partisan bill."
I'm tired of the nonsense and want both parties on board to tackle an issue that almost toppled our economy. Here is the real problem: While this debate is ongoing, according to the Times, "both parties are eagerly courting campaign contributions from well-heeled donors in the financial sector."
I think people from both sides of the aisle should demand more from our legislators.
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