Monday, March 28, 2011

The Attack on Financial Reform

link here to article

The Dodd, Frank reform bill leaves a lot of discretion with regulatory agencies to interpret the intent of the law and to enforce it. The lobbying by the banking industry has been intense against aspects of the bill which limit their risky rent seeking behavior. The GOP has been most eager to show its support for neutering the law. Its approach is similar to its response to the healthcare reform bill. They are cutting the budgets for the agencies that are responsible for enforcing the bill. They can cover their actions by their generic opposition to big government and government spending. They are also trying to staff the agency leaders so that it will be more difficult to make decisions and get things done.

The Obama administration has an opportunity to provide some leadership by choosing the most qualified person for heading up the Consumer Protection Agency. The GOP will oppose a competent leader like Elizabeth Warren but this is a good way to expose its game plan to the public. She handles herself well when faced with tough questions. It would also excite his base which has been looking for signs of leadership. The risk, of course, is that it will be more difficult for him to raise campaign funds from Wall Street.

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