De-bugging Wall Street: The Obama plan and the lobbyists for and against it
No one can deliver bad news like the smooth, articulate Barack Obama. He's so adept and quick that he can kill a fly during an interview, so classy that he even picks up the dead fly afterwards instead of just letting it lie there.
But back to the bad news: It depends on who's listening. The public (or at least some of them) may embrace the president's fairly grand plan to overhaul the financial system as good news — Obama's so charismatic that we'll just have to overlook the bland and often ridiculous spin his team puts on things. The White House's creepily over-friendly blog post about the plan is called "New Foundation, New Stability."
The plan's details are public, everyone's writing about it, it will be hashed and rehashed. Commenters and the public will take seriously every part of Obama's plans for this War on Error, whether each morsel has a chance in hell of becoming law. But most of the work to implement it will take place during arm-twisting sessions on Capitol Hill that no one will see — other than the lobbyists and the pols whose arms they're twisting.
The banking industry is well-armed, with battalions of lobbyists and plenty of money to spend on politicians. The lobbyists are the only people who are sure to read all 89 pages of Obama's plan.
They'll be relieved to find that there's no mention of "Glass-Steagall" in it, which means that Wall Street's bankers won't have to completely undo everything. But the words "Consumer Financial Protection Agency" are sure to excite the industry lobbyists, who will assault the very idea like so many woodpeckers on a telephone pole.
The plan's final draft is here. Note that it's ensconced on financialstability.gov.
For my money, I turn to someone I quote so often that I might as well be on his payroll: Simon Johnson, one of the stars of last night's "Breaking the Bank" on Frontline. In "Regulatory Reform For Finance: Three Views," Johnson breaks down the politco-economic drama. Who's behind the Obama reform package? First possibility: Tim Geithner and Larry Summers (I dub them two of "Obama's Four Worst Hires") have seen "the error of their ways" and are now "radical reformers." Johnson dismisses that theory out of hand as "not widely held." The second possibility: G and S "want a minimal degree of reform with a great deal of window dressing." Johnson calls that the consensus view.
Even worse than the second possibility is the third:
Johnson calls that third view "more interesting" and, like the second view, also controversial. And he sets up the battle, noting the possible influence of Cass Sunstein, chief of Obama's Office of Information and Regulatory Affairs — even though Sunstein hasn't officially taken the job yet because some senators are upset with his stance in favor of animal-rights regulations:
Sunstein, of course, is known for the idea of a Nudge - pushing consumers ever so gently towards better decisions. It's a fine principle to guide thinking, but lobbies, opponents within the administration, and members of congress with their own agenda will not be moved through gentle means.
