Financial Reform, Speed, and the Bandwidth Problem.

TPM's Christina Bellantoni has made a list of public figures who are taking a breather from public scrutiny during Gen. Stanley McChrystal's 15 minutes of gaffe. The one group that she forgot to add, though, is telling: The banks and their lobbyists currently fighting strong financial reform during conference committee negotiations between the House and the Senate.

While the conference committee meetings, which promised unusual transparency, were much anticipated, the increasing focus on the BP disaster left both members of Congress and the media with limited bandwidth for the issue. It was most notable in the scrum that resulted when a BP hearing and the financial-reform conference were held across the hall from each other; in the chaos, it was clear the bulk of attention was on the chagrined oil company executives, while lobbyists scuttled around the doors of the negotiating room.

Democratic political operatives hoping to highlight Republican opposition to the bill have worried that the lack of attention is a wasted opportunity, and reformers are concerned that loopholes could be widened in the committee if activists are unable to breathe down the neck of centrist Democrats who make up the bulk of the negotiating team.

Why not slow down the legislation? Speed is of the essence, passing this bill before campaign season gets into full swing will make finding the votes easier, and the ability of various interests to pressure members is weaker now than immediately before the election. There are a lot of other items on the legislative calendar this summer, too -- critical budget bills, jobs programs, and perhaps some kind of effort on the energy bill.

I'd note that Daniel Indiviglio's criticisms of the rush here are disingenuous -- almost every issue in this bill has been extensively debated for well over a year now. Indivigilio focuses on reforming Fannie Mae and Freddie Mac, and it's true that Democrats don't want to deal with that issue in this bill due to the fraught politics and because the housing market is still so destabilized.

However, that shouldn't delay the passage of the rest of this package, especially because the amendments offered by Republicans on Fannie and Freddie are transparent poison pills, like a proposal last week that would have immediately dissolved the two mortgage giants -- a move that, without a careful transition plan, would result in economic disaster. There's no reason Congress shouldn't pass the strongest reforms it can now and take the time to come up with a real solution to the GSE problem.

-- Tim Fernholz

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