When it comes to the art of compromise in the political world today, the measure of success is visible good. If you can see some good at the end of the deal, then you can point to it and call it a win. Because, as everyone knows, you “don’t let the best (or the perfect) be the enemy of the good.”
That was the mantra we heard from politicians and pundits when congress passed the stimulus bill. Just overlook that ‘shovel ready’ may no longer be a necessity, let alone a priority, in uncertain times. Ignore that money quickly spent is money gone, but rarely invested. Disregard that short-term goals give short-term results, including temporary jobs.
No, we don’t want ‘the best’ to be the enemy of ‘the good’!
We heard it again with the passage of the healthcare bill. Never mind that we ended up with expanded health insurance, not health care. Or that the coverage was only for some, not all. Take no notice that the bill only patched the drug donut hole for seniors, but left prices continuing to rise for the rest of us. Forget that competition and price controls on the health insurance industry were left with a hope, but not a prayer.
Never let it be said that we let ‘the best’ be the enemy of ‘the good’!
And we haven’t. Not for the bank bailouts, the auto bailouts, the cash for clunkers, the cash for appliances, the cash for caulkers, the Home Affordable Modification Program, …
Now, the senate is one vote away from passing the Financial Regulatory Reform bill. And it has visible good. Dean Baker sums up the positives (with cavaets) in The Financial Reform Bill: A Very Limited Step Forward :
… the creation of a strong independent consumer financial products protection bureau stands out as an important accomplishment. Such an agency would have prevented some of the worst lending practices that contributed to the housing bubble. It will be important President Obama choose a strong and effective person, such as Elizabeth Warren, as the first head of the Bureau to establish its independence.
The requirement that most derivatives be either exchange traded or passed through clearinghouses is also an important improvement in regulation. However, important exceptions remain, which the industry will no doubt exploit to their limit.
The creation of resolution authority for large non-bank financial institutions is also a positive step, although the fact that no pre-funding mechanism was put in place is a serious problem. Also, the audit of the Fed’s special lending facilities, as well as the ongoing audits of its open market operations discount window loans, is a big step towards increased Fed openness.
But can a compromise only be measured by the up side of the scale? What about ‘the bad’ and ‘the worst?’ When is “the good’ not good enough? And when does ‘the good’ become an enabler of ‘the bad’ and even ‘the worst’?
“All compromise is based on give and take, but there can be no give and take on fundamentals. Any compromise on mere fundamentals is a surrender. For it is all give and no take.”
~~ Mohandas (Mahatma) Gandhi
“No man is justified in doing evil on the ground of expediency. He is bound to do all the good possible. …” “A compromise which results in a half-step toward evil is all wrong, just as the opportunist who saves himself for the moment by adopting a policy which is fraught with future disaster is all wrong.”
~~ Theodore Roosevelt
So does the financial regulatory reform bill achieve all the good possible? Or does it surrender it’s fundamentals and take that ‘half-step towards evil’?
It would seem evil is about to win.
“…there is little in this legislation that will fundamentally change the way that Wall Street does business….More importantly, there is probably no economist who believes that this bill will end too big to fail. The six largest banks will still enjoy the enormous implicit subsidy that results from the expectation that the federal government will bail them out in the event of a crisis.” ~~ Dean Baker
“The fundamental problem with the financial reform bill is that it would not have prevented the current crisis and it will not prevent future crises because it does not address the reason the world is suffering recurrent, intensifying crises. … The bill continues unlawful, unprincipled, and dangerous policy of allowing systemically dangerous institutions (SDIs) to play by special rules even when they are insolvent. Indeed, the bill makes a variety of accounting control fraud lawful.” ~~ Bill Black
“the bill about to be signed into law by the President…I fully expect a recurrence of today’s crisis in a relatively short period of time. It’s probably one of the few times I find myself in agreement with the predictions of Jamie Dimon. But it would be nice to prevent the next one from recurring within his 5-7 year time frame.” ~~Marshall Auerback
“We have to resolve the “too big to fail” problem. Now banks are becoming even bigger to fail. …they are becoming too big to fail but also too big to be saved, too big to bail out…” ~~Nouriel Roubini
Two “no” votes in the Senate are increasingly finding the weight and fate of the financial regulatory reform bill resting on their shoulders. So where do Scott Brown and Russ Feingold stand on the balance of ‘the good’ to be found in the financial regulatory reform bill they will be voting on this month?
“I’m going to be making a decision soon, but I’m liking what I see,” ~~ Scott Brown
It is worth pointing out that last-minute changes to the bill were made in conference committee at Senator Brown’s request. The changes removed the cost of implementation from big banks and hedge funds and gave it to the Treasury’s Troubled Asset Relief Plan and all FDIC-insured banks. Essentially transferring the expense from the individual banks and their users to all tax payers.
To be fair, Senator Feingold also was in talks with members of the administration, Senate leadership and conference committees. But confesses (via HuffPo):
“not once has anyone suggested in those conversations the possibility of strengthening the bill to address my concerns and win my support. People want my vote, but they want it for a bill that, while including some positive provisions, has Wall Street’s fingerprints all over it.” I had a simple test for financial reform — will it stop another financial meltdown? …This bill caves to Wall Street interests, it doesn’t meet the test of preventing another financial crisis, and it won’t get my vote.” ~~ Russ Feingold
It is also interesting to note (via WaPo) that Democratic campaign committees losing big Wall Street donors:
A revolt among big donors on Wall Street is hurting fundraising for the Democrats’ two congressional campaign committees, with contributions from the world’s financial capital down 65 percent from two years ago.
The drop in support comes from many of the same bankers, hedge fund executives and financial services chief executives who are most upset about the financial regulatory reform bill that House Democrats passed last week with almost no Republican support.
Democrats have lost financial ground in areas other than New York. As the second-largest source of cash for the party, the San Francisco region’s big donors have cut support to the DSCC and DCCC by 34 percent, with donors in the legal and financial sectors dropping the most.
It would seem that ‘half-step towards evil’ can’t buy loyalty. So politicians beware when you are surrendering to the worst — it is at your peril.
Oh, and on a personal note …Thank you Senator Russ Feingold for standing on Principle!
*Update – Senator Brown throws cold water into the faces of Tea Party and Massachusetts dreamers. (via The Hill) Brown to support Wall Street reform; Dems edge closer to 60:
“I appreciate the efforts to improve the bill, especially the removal of the $19 billion bank tax. As a result, it is a better bill than it was when this whole process started,” Brown said in a statement on Monday. “While it isn’t perfect, I expect to support the bill when it comes up for a vote.”
Improved for whom? Not the American taxpayer!
Thanks to Brown we are once again — surrendering to the worst!