The Case for Financial Reform

It is clear that we are in one of the worst financial crises to hit America. What is not clear is whether or not we are doing anything to protect ourselves from another financial disaster in the future. Unfortunately, at the moment it looks like the government isn't doing much to prevent another economic disaster.

Both President Obama and leading members of Congress have called for banking regulatory reform. The House has passed a reform bill which is strong and adheres to many of the standards set by the Obama administration. But the Senate has yet to pass a bill of any sort. The partisanship and Republican opposition in the Senate has brought almost all hopes of a bill of any sort passing in the Senate. Apparently 51 votes is no longer a majority in the Senate. The Republicans are threatening to fillibuster almost anything that the Obama administration wants, including anything relating to financial reform. The Democrats could pass a watered-down bill, but in this case it might be better to pass no reform at all. As Paul Krugman states, a watered-down bill would create "a false sense of security and a fig leaf for politicians opposed to any serious action." This bill would "then fail in the clinch." A watered-bill would be doing the opposite of what it was created to do. For this reason, it would be better to pass no bill at all. Although this too is a bad idea. Having no bill at all would be a big win for Republicans and lovers of the free market. Politically, Democrats in the Senate are in a very strange predicament.

It has been over a year since the great recession began, yet nothing has been done to prevent it from happening again in the future. If Congress remains as partisan - or as Republican - as it is right now, then a financial reform bill will most likely never pass. In these difficult times, one can only hope for the best.

Source: The New York Times