Today, Congress outlawed greed on Wall Street – or so they would have you believe. In a close 60-39 vote, the U.S. Senate passed one of the largest financial overhauls in history – legislation aimed at improving accountability and transparency in the financial system and essentially putting an end to bailing out businesses deemed “too big to fail.” Well, at least, through the final three months of the current election cycle, that is.
Once again, the Democratic Congress, along with their fearless leader in the White House, have paid political lip service to solving a real problem through the passage of legislation and expanded the size of the federal government at the same time. Earlier this year we saw them do just that through the passage of universal health care and now they aim to regulate the financial industry – creating a scenario where the government can interfere with businesses when they deem them to be harmful to the national economy.
If this isn’t further proof that President Obama, at the very least, doesn’t ascribe to some socialistic ways of thinking, it is difficult to imagine what policies he would have to pass or implement to prove it. Of course, this bill was passed under the guise of politicians standing up to the faction of society that supposedly is entirely responsible for the current stagnate economy in which we reside. Fittingly, this bill was named Dodd-Frank, after Senator Chris Dodd (D-CT) and Congressman Barney Frank (D-MA), the chairmen of the financial committees in the Senate and the House, respectively.
Senator Dodd and Congressman Frank were both chairmen of those committees at the onset of the current economic crisis in early 2007 as well. Both were supportive of Fannie Mae and Freddie Mac, the loan mortgage corporations that made practices of handing out risky loans (which were never repaid) and instrumental in bringing about the subprime mortgage crisis. Despite the urging from some Senate Republicans, regulation of these lending giants was (unsurprisingly) not addressed by the bill passed today.
Now these career politicians want to point the finger at the evil, heartless Wall Street, which, unlike them, does not have to stand before the electorate at some point. As Senator Tom Coburn (R-OK), a staunch advocate of fiscal responsibility, points out in an op-ed for RealClearPolitics.com, there is a “massive disconnect” between lawmakers’ rhetoric about reforming the financial industry and the actual effects of this bill which, he argues, only works to grow government and help its supporters (namely, Democrats) in an otherwise tough election year for them.
Coburn also points out that this bill is not exactly opposed by the CEO of Goldman Sachs – a corporation which it is intended to regulate. Like Obamacare, this bill is overlong (2,300 pages) and overcomplicated – and not likely read in its entirety by any member who cast a vote in its favor today. The law will undoubtedly create a number of convoluted rules and confusion for businesses for years to come and further hinder their ability to thrive and create jobs in this ailing economy.
In praising his thoughtless base of supporters in the Senate for their work today, President Obama was anything but hesitant to demonize Wall Street and its allegedly corrupt practices as the central targets of this new reform. Never mind that he recruited some of his economic team, including Treasury Secretary Tim Geithner, directly from Wall Street. As usual, Obama and the Democrats would like to have the public believe that Wall Street and the financial industry are exclusive havens for Republicans – when nothing could be further from the truth.
The political significance of today’s bill will likely expire once the votes in November’s election have been cast. Congressional Democrats can now return to their home districts during their lengthy August recess and tout their vote in favor of financial reform to angry constituents who may have otherwise (and rightfully) lost faith in them.
After the election, however, the politics surrounding this bill will have vanished, while its passage will have effectively thrown a wrench into the already-tedious operations of the financial industry and extended the reach of the federal government to a greater level. But that isn’t really a surprise coming from the current regime in Washington. Another day, another law.