The Big Question: Is it smart for the GOP to block financial reform?

John Castellani, president of the Business Roundtable, said:

The current lack of progress on reaching a bipartisan solution to financial regulatory reform is disappointing. We believe it is essential to have a collaborative, thoughtful approach to reform in order to stabilize the financial markets and guard against another financial crisis like what we saw in 2008. Yet, to get there, policymakers must approach reform with a long-term view that protects companies’ ability to create jobs and produce goods and services that grow the economy and benefit all Americans.

As a longtime supporter of robust financial regulatory reform, policymakers need to work together in a bipartisan manner to develop balanced and focused financial regulatory reform legislation that will promote financial stability and long-term growth. The priority should be to deliver a substantive bill that modernizes financial regulation and addresses systemic risk, while avoiding the harmful effects of an unworkable one-size-fits-all approach for the thousands of public companies that would be subject to financial reform. We can get there, but it will take informed bipartisan cooperation on both sides.

John Feehery, Pundits Blog contributor, said:

It’s a risky move. Time will tell if it is a smart move. Wall Street is about as popular as Congress. If Republicans are in any way seen as defending Wall Street tycoons, they are in big trouble. So, if they do decide to oppose this for the rest of the year, they better come up with a better alternative and then market the hell out of it.  

Craig Newmark, founder of Craigslist.org, said:

I’m not the sharpest tool in the shed, but I can see that regulatory reform would protect people from financial companies that take advantage of them.

However, I can check out sites like opensecrets.org, and check out how much the banks pay politicians … and then see them oppose reform.

Peter Navarro, professor of economics and public policy at U.C. Irvine, said:

The bill is another phone book-size monstrosity that the public won’t really understand. The topic is also more arcane than healthcare so there is far less passion on either side. So opposition won’t hurt the Reps and is consistent with their just-say-no strategy.

Dean Baker, co-director of the Center for Economic and Policy
Research, said:

The Republicans are betting that the media is so incredibly incompetent and corrupt that they can carry water for Wall Street while claiming to be tough on Wall Street. So, they are opposing legislation that would restrain the banks’ ability to take risky bets with depositors’ money and impose fees to pay for their own bailouts, by claiming that they don’t want taxpayers to bail out Wall Street.

Can they get away with this nonsense? Well, given the he-said, she-said nature of reporting, there’s a decent chance.

Justin Raimondo, editorial director of Antiwar.com, said:

What I want to know is why Goldman Sachs — the firm which has not only benefited the most from the bank bailout, made billions on account of government policies, and gave a record amount to the Obama campaign — is all for this “financial reform.” As Goldman’s CEO Lloyd Blankfein and President Gary Cohn put it in a letter prefacing Goldman’s annual report to stockholders:

“Given that much of the financial contagion was fueled by uncertainty about counterparties’ balance sheets, we support measures that would require higher capital and liquidity levels, as well as the use of clearinghouses for standardized derivative transactions.”

The Goldman group wants two major changes to the regulatory system: a ban on high-stakes trading, and tougher rules when it comes to trading derivatives. The “fatcats” denounced by Obama want to be regulated — why is that?

Look at their letter: They want the government to minimize “uncertainty about counterparties’ balance sheets.” Translation: they want federal regulators to guarantee Goldman’s insurers and/or debtors don’t risk huge losses. This isn’t like Grandma and Grandpa’s bank deposits getting protection from the Federal Deposit Insurance Corporation (FDIC); it’s the wealthiest and most politically connected Wall Street firm demanding that its partners and collaborators receive a guarantee from the government that they won’t go under. Why does Goldman & Friends need or want this protection? Well, because they’re “too big to fail,” you ninny! 

It’s more socialism for the rich — which is really corporatism, as Ron Paul recently pointed out to the Tea Partiers, and not “socialism” in its usual meaning at all. The rich get richer, and the middle class pays for it; that’s plutocratic socialism, or corporatism, in a nutshell. And that’s our problem, the parasite that’s draining the very life out of our economy. Until it’s exorcised, we won’t see a recovery.