I guess all this buddy-buddy talk was too good to be true -- financial regulation reform looks to be health care 2.0:In spite of efforts by Barack Obama, US president, to woo Richard Shelby, the lead Republican on the Senate banking committee, people taking part in negotiations from both parties said they were unlikely to agree on a bipartisan draft law.“I’m afraid we’re moving towards a partisan process,” Bob Corker, a Republican member of the committee, told the Financial Times.Republicans complain they are being forced into an artificial timetable that is reducing the chances of agreement. People on both sides of the committee, chaired by Chris Dodd, the Democratic senator, say the chances of the law being passed by the year-end, as planned by the administration, are slight.“The more time we [take], the more intelligent regulatory process we’ll have . . . and I hope we’ll take until the first quarter of 2010 to actually put something into law,” said Mr Corker.What in the world does he want to talk about? It's not like Corker is pushing some specific agenda or has offered any major ideas, at least publicly. These issues have been at the forefront of the policy debate for a year now, and certainly have been bubbling underneath for a long time. If he doesn't have any specific concerns, its hard to conceive of this as anything but a delaying tactic that simply substitutes vague delays for substantive engagement. (C.f. Senator George Voinovich on cap-and-trade: "Why are we trying to jam down this legislation now? Wouldn't it be smarter to take our time and do it right?")There's a pretty big argument going on in the Democratic Party between those who want to reshape the financial sector fundamentally and those who want to nudge it toward responsibility, which I talk about in my article today. Sometimes, though, it's easy to forget that there is also an opposition party out there that believes we should do virtually nothing -- the Republicans seem as clueless as the bankers. Here is an exchange between Treasury Secretary Tim Geithner and Rep. Spencer Bachus, the top GOP member of the House Financial Services Committee, from a hearing last week discussing what to do about the big banks:
GEITHNER: I -- I don't think we're disagreeing, Congressman, except I think -- I think if I -- if I understand you correctly, you're in favor of making sure that these firms can be held to higher standards. This is a way of doing that, and -- and...BACHUS: No, I -- you know, and let me say this. I'm -- I'm not in favor of -- you know, of -- I'm not in favor of them being held to higher standards. But if we are going to hold them to higher standards, I think the market's going to have to know.GEITHNER: But hold on. You would -- you would not impose tougher standards on the largest, most risky institutions than apply to a community bank or a regional bank?BACHUS: ... Well, I'm not.Astonishing.
-- Tim Fernholz
