Friday, April 16, 2010
To understand what’s really at stake right now, watch the looming fight over derivatives, the complex financial instruments Warren Buffett famously described as “financial weapons of mass destruction.” The Obama administration wants tighter regulation of derivatives, while Republicans are opposed. And that tells you everything you need to know.
Since the 1930s, we’ve had a standard procedure for dealing with failing banks: the Federal Deposit Insurance Corporation has the right to seize a bank that’s on the brink, protecting its depositors while cleaning out the stockholders. In the crisis of 2008, however, it became clear that this procedure wasn’t up to dealing with complex modern financial institutions like Lehman or Citigroup.
- Paul Krugman, The Fire Next Time
The Media is gearing up for the next big battle in Washington, this time over proposed Financial Reform. But the objectives of reform are so clearly in the interest of the American people and our national economic solvency, that the Dems seem "giddy" at the thought of Republican opposition. November here we come?
Brian Beutler elaborates on this in his article on Talking Points Memo, Make Our Day! Democrats Giddy Over GOP Opposition to Financial Reform:
About a week or two. That's how long Republicans have to decide how they ultimately want to play their hand on financial regulatory reform. According to numerous Democratic aides and key senators, the GOP will either have to join forces with Democrats on a bill that hews very much to the White House's demands, or they'll have to do their best to block a bill that enjoys wide popularity. But as much as Democrats want to change the rules that govern Wall Street quickly and smoothly, they also love the politics of moving the bill forward without GOP support and letting Republicans publicly justify their decision to protect hated financial institutions from the regulations they oppose.
Aides go further, admitting that they'd relish the prospect of putting Republicans on the side of big banks in opposition to reg reform. In stark contrast to their approach to the year-long fight over health care reform, Democrats now say broad bipartisan agreement isn't worth it if it sucks up too much time, and needlessly weakens the bill.