The House and Senate have reached an agreement and we have a financial reform bill. That means we’ll see significant improvements over the status quo as it existed yesterday. It also means we still haven’t addressed the gravest risks to the economy. And for those of us who care about this country, it means that we still have work to do.

Richard (RJ) Eskow, Huffington Post

I agree with the major premise of this article and support efforts to combat the Republican attempt to regain control. The conservatives have proven that they care nothing about the average American and will say and do anything to return to power.

That said, I think the article is a little disingenuous on multiple points. The first and most glaring is the comparison between Obama and FDR. It is true that FDR had an appreciation for fiscal conservatism, but he was also very bold in his positions to spend and promote the common person.

It was during his first 100 days that the New Deal was born. In his first inaugural address, FDR openly condemned the same caliber of criminals who Obama has brought into his inner circle:

“The money changers have fled from their high seats in the temple of our civilization. We may now restore that temple to the ancient truths. The measure of the restoration lies in the extent to which we apply social values more noble than mere monetary profit.”

And while FDR did balance the standard budget, he also created a second, “emergency” budget. It was through the emergency budget that funded the jobs programs that cut unemployment in half between the time he took office and 1936.

Once again, we need jobs. We don’t need temporary stimulus; we need federal government investment in infrastructure. Unless that happens, we will see a double-dip recession. What would FDR do? What will Obama do?

FDR did finally succumb to the pressure of the deficit hawks in 1938 and cut back spending. The result was that after growing at a compound annual rate of 9% since 1933, the economy took its first step backward.

We need Obama to take a lesson and stop playing pragmatic politician. His bent for passing marginal legislation is nothing more than a façade over business as usual. We need him to stand and be counted. I’d like to see Obama follow the model of FDR and call it the way he did on election eve 1936:

“We had to struggle with the old enemies of peace–business and financial monopoly, speculation, reckless banking, class antagonism, sectionalism, war profiteering.

They had begun to consider the Government of the United States as a mere appendage to their own affairs. We know now that Government by organized money is just as dangerous as Government by organized mob.”

We need bold, courageous leadership, not more milquetoast. This financial “reform” legislation is just the latest farce of a captured Congress. And the notion that, as Obama has said, it’s “most significant financial reform since the 1930s” is patently absurd. Has he forgotten about the Financial Services Modernization Act of 1999, the repeal of Glass-Steagall that set the stage for the Great Banking Rip-off of 2007? Perhaps he was simply referring to the heft of the 2,000 page legislation?

“Once you understand that the resolution authority is an illusion, you begin to understand that the Dodd legislation would achieve nothing on the systemic risk and too big to fail front.”
Simon Johnson, MIT Professor, co-author of 13 Bankers

People need to take notice of what’s going on here. Senator Dodd’s bill absolutely needs to be sunshined and debated. This is not sound financial system reform and regulation, and all Americans need to be concerned. I’ll be the first to admit that I don’t understand all the aspects of cross-border financial institutions, but I do appreciate some regulation issues, especially where the detection component of resolution authority is involved. It just opens up an additional layer of confusion with tracking derivatives and off balance sheet transactions. Wasn’t that a big part of what was behind Lehman and Repo105?

Financial reform must definitely be high on our list of priorities, but we need to do it right. Our nation can ill afford another round like the recent meltdown. The government itself is unlikely to have the resources to put things back together next time.

I’m nowhere close to being an economist, but even I can see that Chris Dodd has put together a gift to the banking industry. Relying on resolution authority is one thing, but putting the CFPA inside the Fed and allowing the FSOC to veto its decisions . . . it’s like putting the hen in the fox house! And then leaving everything to the discretion of an agency that can be overruled, rather than setting the guidelines it will enforce into law — it’s slight of hand, and Dodd, the conman, will be gone before we find out we were ripped off.

The bill needs to have measures in place that will force the Fed’s hand, otherwise what are the chances they’ll have the nerve to test the system and pull the trigger? Real reform will have hard caps on size and leverage ratios, derivative reform, and definitive remediation requirements. It will also have a fully independent CFPA that’s not subject to FSOC control, and does have control over non-bank entities, like auto dealers.  As is, this will be a mess, but I’m still hopeful that real reformers like Ted Kaufman will stop Dodd from launching his lobbyist career on this watered down smoke-screen excuse for financial reform.