They finally got the memo: The people of the United States are not happy that Wall Street executives got bailed out by American taxpayers after their risky investments went sour. While people can argue about whether or not this was the right move to make (I personally believed that it gave our economy a much needed safety net from a pretty dangerous economic situation), but I don't think anyone doubts that both the Bush and Obama administrations acted out of necessity. There was an unfortunately legitimate claim made that if we let Wall Street fail, everything on Main Street would be next to come down.
Barring any all-too-familiar delays that would be sadly typical of the U.S. Senate, they will be undertaking debate on President Obama's proposed financial reform that would break up the banking system in the U.S. This would eliminate the "too big to fail" minoker that was used as justification for giving them the bailout in the first place. No longer would the American people have to fear ramifications if the most powerful lending institutions in our nation were taking huge risks with the money that these people invested in order to pad their bonuses at the end of the year.
By separating these banks into two different parts, banks that held people's money would no longer be able to invest it in the open market, creating the opportunity that the money of these people would disappear without them doing anything besides making a deposit. This action is also important, because he listened to his smart economic advisor (Paul Volcker), instead of Lawrence Summers and Tim Geithner, who, aside from having policies that directly reflect their recent employment on Wall Street, are also corrosive and can't make a good case for fiscal policies to Congress, a skill that is absolutely essential to any kind of meaningful reform. He makes a good case in this article in the Washington Post for places where the market needs regulation (preventing situations where the banks can harm individuals) and places where it does not.
Volcker told members of the Senate Banking Committee that he supports government safety nets, such as deposit insurance for commercial banks, but that taxpayers should not be on the hook for risky practices that aren't aimed directly at helping a firm's customers.
There is another side to this debate: The political aftermath of such a move. The White House has been losing the battle for public opinion for the last few months, mainly by allowing themselves to be cast as friends of Wall Street, taxes, and overregulation on everything from the polluting smoke emitted by factories to the amount of time people get to see their doctor every month. However, fresh off a ruling from the Supreme Court allowing corporations to spend unlimited resources on political campaigns and this financial regulatory push, there appears to be a potential fight brewing between the Democrats and corporate America. For the Democrats' electoral stake in 2010 and beyond, this is a fight they must be willing to embrace.
Democrats must once again be the champions of the little guy. If they want to hang on in 2010 and have success in 2012, they need to commit right now to the American people that they are the party to be counted on to push back against corporate greed in our society. They need to commit to being the party of small business. They need to commit to being the champion of the causes of all of the people who had their homes and farms foreclosed upon. THis financial reform is a good start, if branded right: They are taking the power out of the hands of Wall Street to hold the government and the citizen of the United States hostage if their risky investments don't pay off.
Corporations will put up money to beat the Democrats, but they need to fall back on the grass roots support they have always fought for, out-organize the Republicans, and win back the hearts of the American people. Democrats should be the party of populists, because they are the ones that care about putting people back to work (evidenced by the Republicans lack of support for a jobs bill this last week), they are the ones that care that no person is our country goes without health care, and they are the ones that need to reinforce that they are the (educated) people's party. Now it's time they start acting like it.
I will end with a telling quote from a New York Times article entitled "Irked, Wall St. Hedges Its Bet on Democrats". It reeks of indignation on the behalf of Wall Street that President Obama has chosen to take them on on these issues. Maybe Wall Street is meant to be run by all Republicans if the tone is going to be "what have you done for ME lately", instead of on which party has better, and more responsible policies.
"If the president wanted to turn every Democrat on Wall Street into a Republican,” one industry lobbyist said, “he is doing everything right.”
If Wall Street and the Republicans want to turn the 2010 election into an election where voters are looking out for themselves the same way Wall Street is starting to do now that they've come under attack, it's time for the Democrats to send them a strong, cohesive message: Bring It On.
Cross posted at http://thewritersblockblogger.blogsp...