The President went to Wall Street today and said … well, nothing new, really. The substance of his speech was that Congress ought to pass all those financial reforms the Treasury Department proposed a few months back. Actually he said near the end of the speech that the reforms “will pass.” Want to put some money on that?
The Big Three Obama Administration financial reforms outlined by Obama today are (1) creating a Consumer Financial Protection Agency, (2) giving the Federal Reserve the job of systemic risk regulator, and (3) establishing a “resolution regime” (which I really think we should start calling “death panels”) for non-bank financial institutions and complex bank holding companies that run into trouble.
There were certainly some nice rhetorical flourishes:
We will not go back to the days of reckless behavior and unchecked excess at the heart of this crisis, where too many were motivated only by the appetite for quick kills and bloated bonuses. Those on Wall Street cannot resume taking risks without regard for consequences, and expect that next time, American taxpayers will be there to break their fall.
That came, however, right after a somewhat unfortunate homage to Warren Harding—”normalcy cannot lead to complacency.” This is clearly not a subject that lends itself to speechmaking dynamite. Well, it could be, if Obama were willing to rail at the “malefactors of great wealth.” But he’s not (“I’ve always been a strong believer in the power of the free market,” he said at one point). So we get an ode to moderation and prudence.
Now I’m a big fan of moderation and prudence. And I really liked lines from the speech such as this one:
[I]t is important to note that the very absence of common-sense regulations able to keep up with a fast-paced financial sector is what created the need for that extraordinary intervention. The lack of sensible rules of the road, so often opposed by those who claim to speak for the free market, led to a rescue far more intrusive than anything any of us, Democrat or Republican, progressive or conservative, would have proposed or predicted.
Will such arguments be enough to put financial reforms back on track? I really can’t tell. This kind of complicated stuff is hard to push through Congress, and the Obama team’s No. 1 legislative priority is clearly health reform. The moment of greatest urgency on these matters has passed. Normalcy is breeding complacency.