Josh Green takes another whack at assessing financial reform, responding to my post yesterday. I may be a blogger, sarcastic, glib, condescending, sneering, cynical, and, at the same time, naive enough to think this bill is strong -- he forgets I'm also quite handsome -- but Green's reply is still wanting, I think. A few minor points before this debate proceeds inevitably to the dustbin of history.
One is that the Consumer Financial Protection Bureau in the Federal Reserve, as outlined in the Senate financial-reform bill, is truly independent. I was worried it wouldn't be, but I'm confident (as is Elizabeth Warren) that the bill is written to grant it real independence. I'm more concerned about the carve-outs in the House bill and preemption issues -- you can't afford to lose sight of the details in a bill with as many moving parts as this. Nonetheless, while there are plenty of things to fault in the bill, by and large consumer protection isn't one of them.
Second, on a meta-note about the merits of our political class: If examples of admirable politicians abound, can you cite anyone besides Henry Waxman, the left's favorite Congressman and a real hero? (I'd be remiss if I didn't link to this post praising the memoir Green wrote with Waxman.) If we want real reform, though, we have to be realistic about how to get there. Relying on politicians isn't going to cut it -- political pressure, organizing, and voter anger is what gets votes to the table.
To that point, Green says the reason that some reforms have been left on the table is alluded to in a piece I wrote last week comparing, as Green does, the efforts to reform health care and finance. The difference between the two was decades of preparation, organizing, and funding on the side of health-care reform, and a year of scrambling to create the same infrastructure for financial reform. The only way to get the populist changes Green prefers is the kind of political action -- like the primary challenge that motivated Blanche Lincoln's strong derivatives rules -- that you need to influence the majority of politicians, who are often only as courageous as the next poll. You can't, as the old saw goes, take the politics out of politics.
In any case, I don't disagree with Green that we shouldn't over-praise Chris Dodd and Blanche Lincoln for doing their jobs. But if he thinks, like me, that the compromised health-care reform legislation includes "far-sighted reforms," then he should be able to recognize the similar promise of flawed but ultimately far-reaching and important financial-reform legislation.
-- Tim Fernholz
