How Financial Reform Gets Done (Not)

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Today provided yet another example of how the best government money can buy works. The Senate majority leader Harry Reid suffered an embarrassing defeat when his effort to pass a motion for cloture, which would have stopped debate on the financial reform bill, failed due to two Democrat and one Republican defection among the votes he thought he had. And the naysayers are the typical “teki no teki wa mikata” (enemy of enemy is friend) alliances that are routine in politics. The Republicans are virtually united against the bill (the only defections are the two senators from Maine); the two rogue Democrats, Maria Cantwell (Washington) and Russ Feingold (Wisconsin) are opposed because the feel the bill is not tough enough (Cantwell wants votes on two amendments).

This tempest in a teapot is engaging distraction. Why have political commentators been hesitant to connect the dots between the “no incumbent left standing” movement and the lack of meaningful financial reform?

Despite an impressive amount of scrambling to get tougher amendments added at the last minute to the Senate bill (which before we get too excited, still has to be reconciled with the House version), most of the proposals either amounted to much less than their headline billing suggested. or conversely, were ineptly conceived, with the result that the the industry howling that they would be monstrously disruptive was actually correct, which allows the banks to gut or block those measures.

David Dayen at FireDogLake (hat tip Richard Smith) has some is a welcome exception:

It’s not that voters had any knowledge of this when they went to the polls yesterday. It’s that they’ve seen shenanigans like this consistently for the last five years. They’ve seen it on the Military Commissions Act and the Iraq funding bill in 2006, the FISA bills in 2007 and 2008, TARP in 2008, the health care bill in 2009, and now FinReg in 2010. They’ve seen defeat grabbed from the jaws of victory over and over and over again, and they simply have lost all trust in this crop of elites to do the job. And it’s hard to argue with the public on this one.

This piece of his post caught my eye:

All through this time, Chris Dodd filed an amendment to gut the strongest piece of his own bill – the derivatives piece “authored” by Blanche Lincoln. I say “authored” because it was completely obvious that she was handed this tough bill for the benefit of her re-election, and even though that wasn’t secured last night, on the very same night they submitted the weakening piece in the form of a manager’s amendment. Instead of spinning off the lucrative swaps trading desks from the big banks, the bill as amended would let the systemic risk council, made up of agencies who opposed the proposal, “study” the provision, until making a (foregone) decision in two years. Lincoln says she’ll fight against the weakening amendment – oh, we’ll see about that.

Yves here. If the derivatives language was indeed provided to Lincoln as a bit of useful pre-election theater, the process is every bit as cynical as I thought. Readers no doubt know I am no fan of big financial firm chicanery, and a card carrying hater of credit default swaps (for background, see here). But the Lincoln amendment is guaranteed not to happen. The industry is correct in howling that implementing it would be hugely disruptive (the dealers themselves are the biggest users of plain vanilla interest rate and FX swaps; their trading volumes would overwhelm any independent swaps dealer). Banking industry expert Josh Rosner noted by e-mail,

[The amendment] would move bank derivative activities into a new shadow system where end users begin to build insufficiently regulated dealer businesses (which the banks/i-banks would buy an unconsolidated interest in).

Yves again. So the amendment (supposedly) creates a huge flurry of initial press about how tough she and the Dems are to those nasty banks, but then gets quietly excised or watered down to irrelevance when no one is looking. And by mid-term elections, the assumption is no one in the chump public will understand what the bill does or doesn’t do. The key element is that the Dems can say they have a banking reform notch in their belts as a talking point.

Another headfake is Volcker Rule (which would require banks that can access emergency facilities like the deposit window to exit proprietary trading) as now embodied in the Merkley-Levin amendment. Economic of Contempt and your humble blogger seldom see eye to eye, but he is 100% correct on this one:

The biggest problem with Merkley-Levin is that its authors appear to confuse “definitions with more words” with “more specific definitions” (and thus less of that evil regulatory discretion). Merkley-Levin prohibits “proprietary trading,” which it defines very broadly, and then creates 9 categories of “permitted activities” (listed in section (d)(1) of the amendment). The categories of “permitted activities,” which function like exceptions to the definition of “proprietary trading,” are so ridiculously broad that they completely swallow the amendment’s prop trading ban.

Yves again. He shreds it in lurid detail. Yet Merkley is either a great actor or is completely unaware that he has been played for a fool (see 1:45-2:05 on this clip).

Not that it matters, his amendment was one of the two that was to be sidelined by the cloture vote today. I don’t understand this tactically; letting empty “reforms” go forward would seem to be a win/win. But the Republicans seem to be sticking to the “all regulation is an expansion of government and therefore bad for Main Street” script.

Some otherwise astute commentators appear to have fallen for the industry’s posturing. It has taken the position that it is non-negotiable and complain vigorously over every possible change that might be foisted on it, no matter how minor. That allows it to (later, with convincing-sounding squeals of pain) give ground on issues that are not a big deal or it can compensate for with little inconvenience.

For instance, one apparent win in the Senate bill was the insertion of a provision allowing the powers that be to oversee debit card fees to merchants (personally, as I have discussed earlier, I see debit cards as a bad product for consumers, since they serve much the same function as an ATM card with vastly less security). But credit card networks had sorta forced merchants to take debit cards (they were effectively co-sold with the credit card merchant accounts, and since credit card customers spend more per transaction than the norm, it was in a vendor’s interest to accept credit cards), expect them to reverse their model, doing more to steer merchants and customers back to credit cards (their old model) and improving the profitability of the credit card product by cutting or eliminating frequent flier miles. So while this indeed is a win for merchants, it’s quite another matter to think this is going to make a lasting dent in the returns the industry makes form the debit/credit cards payment complex. As the credit card reform initiative has shown, the banks have proven to be masters at finding new ways to extract income when the old mechanisms are blocked (and remember, that assumes this measure survives reconciliation with the House bill).

One exception that has oddly gotten virtually no press (perhaps a sign it is destined to die a quiet death in due course) is an amendment added to the Senate bill last week by Susan Collins of Maine, which would require banks with more than $250 billion in assets to have higher capital ratios, and would disallow inclusion of trust preferred securities in Tier 1 capital (hat tip John Bougearel). Shiela Bair supports the measure and Geither opposes it, which is revealing since the Treasury Department has said it is in favor of measures to make it more costly for mega banks to be mega banks as a way to force them to streamline…and the main measure was to be via higher capital charges for really big players.

The Geithner position, as Richard Smith discussed last week, is now to defer to Basel III, the new international bank capital standards which are currently under development, which conveniently could not possibly go live before 2016. The argument is on one level sensible, that the US needs to adopt standards that are reasonably consistent with those implemented abroad. However, on another level, it assures a race to the bottom if industry enablers masquerading as regulators use “harmonisation” as an excuse to do as little as possible. Since Europeans are very attached to their “universal banking” model, don’t expect Basel III to impose much in the way of extra demands on really big banks.

So despite the theatrics in Washington, I recommend lowering your expectations greatly for the result of financial reform efforts. There have been a few wins (for instance, the partial success of the Audit the Fed push), but other measures have for the most part been announced with fanfare and later blunted or excised. Even though the firestorm of Goldman-related press stiffened the spines of some Senators and produced a late-in-process flurry of amendments, don’t let a blip distract you from the trend line, that as the legislative process proceeds apace, the banks will be able to achieve an outcome that leaves their dubious business models and most important, the rich pay to industry incumbents, largely intact.

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  1. Timmy

    Only Engela Merkel gets my respect for actually doing a very hard thing. (stop naked short and some form of derivative)

    My best luck to her and Germany, they are going to kick some serious ass when the hyper inflation hit after asia hiking their interest rate. (This is coming really fast. inflation is burning high in asia.)

    The rest of weasels and rats will burn in hell.

    1. Daniel de Paris

      Only Engela Merkel gets my respect for actually doing a very hard thing. (stop naked short and some form of derivative)


      My best luck to her and Germany, they are going to kick some serious ass when the hyper inflation hit after asia hiking their interest rate. (This is coming really fast. inflation is burning high in asia.)

      +1 billion.

      Why the hell is noone on the financial blogosphere, except Andy Xien, grasping this massive monetary-driven inflation slowing cooking on China’s backburners? That remains a mystery.

      1. Yves Smith Post author

        I’d be careful about making sweeping statements like “no one in the financial blogosphere”. From a February 19 post by Marshall Auerback and yours truly:

        We question whether a revaluation is the right answer for them, and more important, whether the Chinese themselves see a revaluation as a plus. The government has engineered an enormous increase in money and credit in the past year. In fact, it seems to be as great as 5 years’ growth in credit in the previous Chinese bubble. The increase in money and credit is so great and so abrupt that you tend to get a high inflation quite quickly even if there are under utilised resources. Add to this the fact that China simultaneously is providing massive fiscal stimulus.

        The article discusses some detail why most analysts think Chinese inflation is low and why that is questionable, and points to a devaluation of the renminbi as a real possibility.

  2. Francois T

    So despite the theatrics in Washington, I recommend lowering your expectations greatly for the result of financial reform efforts.

    If it is so, I strongly suggest that incumbents of all stripes seriously lower their expectations of getting re-elected.

    I mean, let’s get serious here: Do the Republiscums truly believe they’ll score political points by opposing each and every reform of the financial industry? As for the Democrats, are they aware that a lot of cats are watching their every move in Congress right now?

    Apparently not! One thing is sure: If this bullshit continue apace, there is no pollster on Earth or in Hell that will be able to forecast the hurricane hitting the polls in November.

    Could be really ugly (or beautiful) to watch.

  3. Francois T

    BTW, if Congress wants to be taken seriously when it is time to write bills with a modicum of common sense, (the least common of the senses in DC) there is one thing they could do to help themselves: Reinstate the famed Office of Technology Assessment (gutted by the Republiscums for obvious reasons, that is, give total freedom to the industry lobbyists to spew their bullshit unopposed by an independent 3rd party) and create an Office of Financial Assessment.

    Both offices would have for sole mission to study everything related to their fields and answer any query Congresspersons would have on any topic.

    This way, they could at the very least, arrive at hearings more prepared and educated than they are now.

  4. psychohistorian

    Yves, Thanks for the frank and clear report on the making of fascist sausage. I had higher hopes for Merkley but maybe he is becoming corrupted and/or compromised like the rest.

    I also had hope for local politics but seeing a friend lose a local state rep race to a carpetbagger attorney yesterday pretty much put a lid on my hope for fixing the system from the inside.

    This train wreck cannot stop soon enough.

  5. attempter

    Why have political commentators been hesitant to connect the dots between the “no incumbent left standing” movement and the lack of meaningful financial reform?

    They’re either equally corrupt prostitutes themselves who want to represent voter anger as a childish mood rather than a justifed response to kleptocracy, or else they’re so inured to the kleptocracy themselves that they’ve come to believe it’s the rightful way of the world, and the voter anger confuses them. They all tell the Status Quo Lie for a living, and some use their own product.

    As for the bill itself, some of us have expected all along that it would be nothing but a scam (at best; there’s still room in conference for it to become even worse than the status quo; also, the one and only worthwhile provision of the House bill, its relatively strong Fed audit, will certainly be a primary conference target). While this or that Senate amendment may or may not have been sound in concept and/or sincerely meant by its proposer, the system is set up specifically to prevent any real reform from getting through.

    Therefore, to still repose faith in any particular officeholder (or candidate for federal office) from either kleptocratic party remains part of our pathology. There’s only one rational strategy for the people of America (as opposed to the kleptocrats and their vile flunkey supporters): As a methodical principle, refuse to vote for anyone from the klpetocratic parties for federal office. Either abstain while proclaiming it’s a boycott, or demand a printed “None of the Above” line on the ballot, or else write in some prearranged phrase like “This is a boycott – None of the Above”. This would have to be a no exceptions principle. We see from cave-ins like Kucinich and Sanders that federal office corrupts everyone without exception. There’s no such thing as “but this guy is OK”.

    At the state and lower levels, maybe some major party candidates haven’t been corrupted yet and can still be supported. This can be decided on a case by case basis. The presumption should always be in favor of alternative parties.

    Which leads to the last point, that the boycott cshould be in effect for a few cycles while concurrently the boycotters give positive support to attempts to build up alternatives to the major parties. Once we reach a critical mass of voters who have definitively renounced the kleptocratic parties, that can open the space for real third parties to fight their way onto ballots and make viable runs for every level of office.

  6. Gary Anderson

    The senate set itself in infamy by defeating the amendment to allow states to set credit card rate caps. This gives credit card companies no argument that walking away from credit card debt is immoral. It is not immoral. It is patriotic.

    Without question, the senate has shown its true colors, with a 60-35 defeat of the amendment.

    Truth is, states may not have set rates that much lower. But to not even give the states the chance is criminal. There are a bunch of criminals and thugs occupying the senate. May they at the end of their sorry lives, find no mercy at the ultimate bar of justice.

    It is past time that people wage a peaceful, but affective war of strategic default of credit cards, just like the war of strategic default has been used against ponzi doomed to fail loans.

    Did I expect more from the Senate? Well, I certainly expected more from Karl Levin, who made us all believe that he was a warrior against fraud and financial crimes. But he is just a fraud. I hope that everyone would find a way to not pay loans back, if you possibly can. That is the only way to wage war against these banks and their minions, the United States Senate. What a disgrace.

    The roll call is on this site that I just put up. Hope it is ok to post:

  7. DownSouth

    There will be no substantive financial reform in the United States until there is a substantive political change in the United States, such as there was in Argentina. In Argentina, the people finally got enough the Libertarian-Austrian-Neoliberal cabal. Argentine president De La Rua and his finance minister, Domingo Cavallo, fled for their lives, escaping in a helicopter in the wee hours of December 20, 2001.

  8. MichaelC

    Two other notable points:

    Dodd withdrew (yesterday) his motion to kill the Lincoln amendment, so it lives for another day. Why he backed off is worth pondering.

    The second odd move was to fold the Levin merkely amendment into the auto dealers exemption amendment. In order for the Merkly amendment to pass, it must first pass on its own, then the auto dealers exemption that now houses it must pass.

    Talk about hardball. Presumably the republicans want to protect the auto dealers (and Levin is from Mich after all) so the dems supporting the Volcker rule will have to agree to protect auto dealers (and lenders) from predatory consumer lending restrictions as the price for the Volcker rule.

    From my read of that move it seems merkely is seen as a pretty serious threat. The Economics of contempt piece has been pretty effectively shredded elsewhere, since it came out (I think the BIg Picture had a pretty good analysis, but there were other credible bloggers who rebutted it pretty thoroghly, so I think you’re still on shaky ground here).

    I respect your views on the shortcomings, but I think you’ve got a blind spot re the Volcker rule. It’s still in play and although Dodd and the admin would like to stick with the version in his bill which effectively guts it by requiring a ‘study’ only, its not quite dead yet.

      1. Yves Smith Post author


        EoC is a regulatory lawyer, and while Konczal is smart, this really is EoC’s terrain. This is not just EoC’s view. Josh Rosner (who knows financial system plumbing better than anyone, bar none) and Chris Whalen also think think the provision is toothless. And I independently think Konczal is wrong here, as he has been on the Lincoln amendment.

        Let’s simplify the EoC analysis. His bottom line it that permitted transactions are defined so broadly as to permit pretty much everything done now.

        Aha, Mike say, but the regulators can claw it back under other provisions. Well not really.

        The first clause he cites is that they can claw it back IF the activity is a danger to safety and soundness. This is a MUCH higher bar than merely “taxpayers should not be backstopping risky trading.” The risks in most cases will not do the firm in, but the backstopping results in artificially cheap funding costs, so the taxpayer is de facto subsiding employees and shareholders.

        The standard for this clause should be social utility, not safety and soundness.

        All the banksters have to do is keep VaR within permitted limits, AS THEY DO NOW. What is the basis for arguing a problem with safety and soundness if risk metrics and risk controls look to be in order? Private equity poses NO threat to safety and soundness (not that that would be permitted, just sayin’). Ditto statistical arb, high frequency trading….as well as hedge fund strategies that employ no leverage or get their gearing from exchanges. The fact that these would not constitute a threat to safety and soundless shows how toothless that provision is.

        This is at most a limit on gearing, not on conduct. His other points also fail when this logic is applied.

        I don’t know why Mike and James Kwak and Simon Johnson have fallen for some of the crap that the Dems are selling as reform.

        With all due respect, I believe it is you who has a blind spot re Volcker. He was never a tough regulator of the big banks. He merely looks tough in comparison to the industry enablers that followed him.

  9. Siggy

    Libertarian-Austrian-Neoliberal cabal. That strikes me as a lot of oxymoron. What does appear to be the case is that our representatives have been captured by the financial services industry. Those folks who tell us in the name of God that they provide the capital for all our good works. Having made the forgoing representation they proceed to extract eggregious quantities of rent from financial transactions that produce no sustainable economic activity. Some transactions even promote failure.

    I’ve seen it asserted that fewer than 50% of eligible voters exercise their franchise. Therein lies the beginnings of why it is that our elected representatives fail to represent we the people. If fewer than 50% of the electorate is voting it is no wonder that so many of our representatives are moderately photogenic dim bulbs.

    Thus, you are absolutely correct to assert that there will be no substantative financial reform until such time as there is substantive political change. To get to that change, lets begin by dropping the labels.

    I really have no idea as to what or who is a ‘Libertarian’, ‘Austrian’, or ‘Neoliberal’. As to cabal, that one I understand and I can conceive of a cabal by default. A conspiracy by idealogical concurrence. What I see in our society is the latter, a conspiracy by the concurrence of idealogy. The idealogy at hand and that which is the engine of our corruption is that of self interest taken to criminal action. At the core of our financial distress is fraud as a tort and as a criminal act.

    The financial crisis that became measurable circa 2006 began much earlier, perhaps as early as 1946. Critical milestones would be the Full Employment Act of 1946, a Keynesian concept that dismisses the fact all government expenditures must funded by either or both of increased taxes and the debasement of the currency.

    The invalidation of the Bretton Woods Agreement in 1971, the conversion to a fiat currency. The currency nolonger is capable of functioning as a store of value and in that fact the concept of fractional reserves becomes meaningless.

    The Repeal of Glass-Steagell in 1999, the open door to the consolidation of economic power in fewer and fewer entities. There were once more than forty banks who were identified as being Primary Dealers. Today there are fewer than twenty.

    The Commodities Futures Modernization Act of 2000, the explicit directive to not regulate derivatives trading.

    In the foregoing sequence, going off the gold standard has been critical. An equally eggregious development has been the belief that there is such a thing as an efficient market. Utter rubbish. Markets are the creation of people and in that they are subject to all of the foibles and frauds that people can and do conceive of. And finally the belief that it is unnecessary to prosecute financial fraud because the market will, on its own volition, punish those who perpetrate a fraud.

    Our contract for government is that of a republic, not a democracy. Our contract for government implicitly demands the participation of all citizens. Until that is taught and understood by the body politic, there is no hope for the United States.

    1. Gary Anderson

      Guys like Mish, who pit the public against the private sector are Austrian types who want massive austerity. Better to default than have massive austerity and massive tax increases.

  10. Tar, etc.

    Happy to know that others see that Merkley is Dodd with many years of posturing for money ahead of him. Meanwhile Dodd retires while the special interests he has been protecting deposit $3.9m in his campaign fund as a parting gift, which is NOT, repeat NOT bribery here in Wonderland.

    There is no point in our legislators legislating on anything until they fix the bribery. They can no more reform finance than they could healthcare. It is congress itself that needs fixed.

    And there is no point in creating new regulators until we face up to why the existing regulators do not work. We don’t even discuss the revolving door anymore, which brings up the related problem of the media. For example, the huge scandal in banks robbing municipalities and school districts of badly needed funds has gone, so far as I know, unreported on the six o-clock news. We can’t keep blaming the public for being uninformed when so many people are paid so well to keep them that way without also pointing a finger at the free pass.

  11. craazyman

    Contemporary Analysis is a school of thought that seeks to indentify the driving pyschological forces that animate the energies of collective consciousness and to establish a set of rules by which those forces operate. This sounds quite abstract, bordering on the jibberish of metaphysics. And it is, and does, to a point.

    But it also can offer perspectives on the unconscious motivations that prevent public institutions from achieving decisions that serve the public good and only enrich their constituents, who never the less feel that they are serving the public interest — “doing God’s work” as they now-famous saying goes. I have developed this body of thought after considerable rumination and reading of psychology, anthropology, literature, poetry, history and drinking quite a lot of wine, beer, scotch, grain alcohol, telquilla, smoking dope, puffing hash-hish, sniffing cocaine and even smoking opium. Not to mention Xanax, anti-depressants and over the counter sleeping aids, and channeling the thinkers from earth history and the various alien races that populate the cosmos.

    A core postulate of contemporary analysis is that group consciousness is not an aggregation of individual consciousnesses — like a form of addition — but instead is a higher force that enfuses and animates the consciousnesses of the individuals that compose the group. It is clearly a force of nature, active and evident in flocks of birds, schools of fish and packs of antelopes on the plains of Tanzinia.

    At the human level, ee can call this the “tribal consciousness” and differentiate it from the individual consciousness, which is what we employ to perceive and describe, through language and art, our emotions and dreams.

    Tribal consciousness requires an animating motif in order to organize itself and deploy its energies. It may even be a separate life form, if we could perceive the multi-dimensional reality that our four dimensions of perception navigate in day to day life. And this life form is seen at rock concerts, political rallies and genocides, where different tribal groups seek to murder each other. The unconcious energies that empower these events share profoundly identical sub-structures.

    America is the first nation in history not founded on the idea of a genetic tribal consciousness. Even ancient Rome, one of the closest parallels to our American culture, was founded on the scraps of Etruscan identity. Although it shook those off threw the ascencion of law and freedom as an evolution of its central organizing identity.

    Our nation’s founding documents deny the very validity of a tribal consciousness, our history of immigration and assimilation further erode it, and so our sense of group self must constellate (as Carl Jung would say) around some other form of energy,

    In fact it does, but in a subtle and bifurcated way (as Hegel observe, every phenomenon brings forth its opposite). Our American tribal consciousness, unable to constellate around tribal dna and racial similarities — as other nations in history have — instead constellates around the more abstract force that is at the source of racial and dna tribal energies — the life force itself, in a process that involves both degeneration and ascension to forge a new unity. And we know, also from Contemporary Analysis, that the life force is expressed metaphorically by money. Because money = property = force = protection like particle = wave = energy. We also know that since everything brings forth its opposite, that the other constellating agent of the American collective consciousness is a the highest realm of thought/philosophical opposite of the root life force instinct (money) and in fact is an englightened universalist egalitarianism (an abtract philosophical notion of equality as incorporated in our founding philosophies and documents).

    What we can perceive, now, from applying contemporary analysis to the issue of financial regulatory reform is the overwhelming obstacle imposed by the reality that money is the life force around which our tribal mind constellates, forms, and operates. Our policians confront not just special interests and poltical pushback against anything that would defang Wall Street, but they are unconsciously pushed back by a foundational belief that money is the empowering life force itself and that anything that controls or corrals it will injure the energy of the tribe. Unlike the decades following the Great Depression and World War II, when an egalitarian consciousness was at least partly active as the empowering agent of the collective mind in the US, we are now at a point of degeneration where money itself is the only empowering agent (how this happened is another long-winded diversion). And so this degeneration of the animating tribal energy source is evident in the political failure of our institutions — from the Fed to the Treasury to our Universities to our representative bodies.

    There is little we can do, practically, to reverse this, except to point it out and argue against its validity in the appropriate channels of influence. When demons are called out and named, they often lose their power to charm and delude. Nor is this of course a substitute for political action, organization or even the nihilistic abandonment of hope of success of any political effort (such a position is entirely rational). But it is an attempt to bring the unconcious into consciouness as a healing modality at the cultural level.

    What is required is a set of philosophies that re-establish an animating idea that can act as the center of the collective consciousness of our tribe. We have lost that and until we recover it, we are doomed to watch zombies destroy the nation, destroy us and ultimately destroy themselves.

    1. attempter

      That’s very suggestive, and offers a useful way of looking at the basic slavishness of America’s non-rich in the face of these crimes.

      It’s related to how “the tribe” quickly renounced any original positive freedom basis of the Revolution and, starting with the written Constitution, focused completely on merely negative freedom and especially its materialistic aspects. The path was wide open for the counter-revolutionary ideology of fraudulently equating economic “libertarianism” with freedom as such. Not that the Constitution necessarily had to preside over this hijacking, but it certainly left the path open to it.

      So in the end the conclusion is the same. There can be no “reform within the system”, since the current tribal consciousness is completely depraved. It can only be converted to a different channel, which we must dig while gradually diverting the flow to it, and be ready to take advantage of when the crumbling banks of the existing channel cause it to overflow unpredictably, since who knows what other channels it might carve on its own.

  12. Richard

    Our text–
    “For instance, one apparent win in the Senate bill…”

    The above shows exactly what is wrong with this bill.

    An “apparent win” here, a loss there. A “tough” provision inserted, then removed, or gutted by exceptions. A mess.

    It seems to me that an effective regulatory scheme needs to be a scheme, that is an internally consistent entirety, built top-down from an understanding of the thing to be regulated, with the specific provisions being neither “wins” nor “losses” but rather essential parts of the whole. That’s more or less what was done in the 1930s, but it’s not what is being done now. Instead this thing is being written on the fly, with this or that Senator getting this or that provision inserted, heedless of its impact on the overall regulatory scheme.

    Because this is not a serious process undertaken for adult purposes, it cannot possibly have a positive result. So, I hope it’s defeated, no matter what “wins” end up in it, because whatever it is in it, it can only make things worse.


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