The Republican attack on financial regulation
Republicans aren’t content with blocking anyone and everyone from leading the Consumer Financial Protection Bureau. Next week, they’re planning to attach a series of anti-Dodd-Frank amendments to a noncontroversial economic development bill. One amendment would neuter the CFPB, of course. Gotta keep trying, I guess. Another would repeal the whole law. A third would stop the government identifying too-big-to-fail firms and regulating them more tightly. And that doesn’t even get into the ongoing efforts to defund the agencies that need to implement the various regulations, or the language in the GOP budget repealing the government’s authority to dismantle firms that are about to detonate the financial system.
One possibility here is that I Rip Van Winkled it for a bit and banks got really popular while I was snoring under a tree. So I asked Gallup. The answer? Nope. Wall Street’s got the sort of poll numbers usually reserved for the guy who ran over your dog when you were a kid, or the boss who fired you from your first job. Almost 70 percent of Americans think they’ve got to much power in Washington. That’s four points below the much-beloved lobbyist class and tied with “major corporations.” Allying with the banks is not how you get ahead in American politics.
Perhaps this just shows that so long as your issue isn’t atop the polls, you can take whatever position you want. Perhaps it shows that substantive positions are meaningless — Republicans often pretend that their agenda is anti-bank, even though it echoes the banks’ agenda almost precisely, and even though they’ve not proposed an alternative package of financial regulations to take its place. Perhaps it just shows what the aforementioned Gallup poll shows: Banks are very powerful in Washington.
But those are all political explanations. What about among Republicans themselves? The tea party doesn’t much like the banks. The Republican legislators who had to vote for TARP and listen to Ben Bernanke talk up the chances of armageddon can’t want to go through that again, right? My only hypothesis here is that the Fannie Man/Freddie Mac/CRA explanation, though discredited, has become such conventional wisdom on the Republican side of the aisle that they think, though can’t clearly say, that regulation of Wall Street isn’t really needed. The problem was Washington, and you can’t solve that with more Washington.
Nevertheless, it’s depressing. If anything, Dodd-Frank didn’t go nearly far enough. The Consumer Financial Protection Bureau isn’t strong enough. But it barely took three years for the pendulum in Washington to swing from “it’s time to get a handle on Wall Street” to “leave Wall Street alone!” Even if Dodd-Frank survives this round of attacks, it’s pretty obvious that any approach that relies on regulators is an approach that, sooner than later, Congress will undermine.
Related: Don’t trust the regulators.