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Ellen Belcher is the Dayton Daily News opinion pages editor. She writes about state government, education, the environment, higher education and all things Dayton.
Martin Gottlieb is an editorial writer and columnist for the Dayton Daily News opinion pages. He focuses on the political process itself and does such national issues as war, the economy, taxes and Social Security, as well as a hodge-podge of local and state issues.
Scott Elliott is an editorial writer and columnist for the Dayton Daily News opinion pages. He writes about education, city and suburban issues, politics, business, workforce and consumer issues.Home > Blogs > A Matter of Opinion > Archives > 2010 > July > 18
Sunday, July 18, 2010
Editorial: Financial reform was needed after dereg flopped
Once upon a time — back in a much-forgotten part of 2010 — financial regulatory reform was supposed to be the one major bill that Republicans and Democrats in Washington might be able to get together on.
After all, the nation’s financial system had collapsed, bringing the economy down with it. Nearly everybody cited irresponsible behavior in the financial sector that the government did little or nothing about. And all this came after a long period of financial deregulation under both Democratic and Republican presidents.
Obviously, there would be a turning of the corner on regulation, with new government activism.
In fact, though,
the bill passed the U.S. Senate with all but three Republicans opposed (just as in the House). The Republicans in support were the women from Maine who have helped the Democrats before and the new guy from Massachusetts, Scott Brown. Ohio Republican Sen. George Voinovich was not there in the end, though he had earlier helped on a procedural vote. He offered four main reasons for objecting.
The first was, “The bill fails to address the main catalysts of the financial meltdown, Fannie Mae and Freddie Mac, whose push to acquire subprime mortgages … helped produce a bubble that burst.”
Those two agencies did play a role in the collapse. But they have been put under a sort of government conservatorship and are not behaving the same way now. They may still need further attention. But this bill does an awful lot of stuff. A line had to be drawn someplace. To oppose it primarily for what it doesn’t do seems odd.
His second criticism was in the same vein. He said the heart of the crisis was the awarding of home loans to people who couldn’t afford them. And he said a Republican senator put up a provision to prevent that.
“Amazingly,” he said, “my colleagues rejected this amendment, and thus virtually nothing in this bill addresses this problem.”
The bill actually has a number of measures to restrict predatory lending and regulate mortgage brokers. And it creates a new consumer agency to hear complaints.
Much is left up to regulators, to be sure. For example, there’s no flat ban on “adjustable-rate” mortgages, the kind under which people start out paying little, only to get blasted with much bigger bills later.
So, for sure, the passage of the new bill leaves problems unresolved.
Sen. Voinovich also said the new consumer agency will have too much power to harass businesses. And he has a problem with new regulations on “over-the-counter derivatives.”
Reasonable people can certainly disagree about various aspects of this complex legislation, almost two years in the making.
Though it entails more government, it is not extreme in that regard. It doesn’t even completely undo the deregulation of banks that happened under President Bill Clinton. (It does restrict bank investments.)
Immediately after the Senate vote, House Republican leader John Boehner called for repeal, just as he and others did after passage of health care. This seems to have become a strategy: every fight must go on and on, lest the president get credit for accomplishing something, and lest Republican financial contributors stop contributing.
Nevertheless, with passage of this historic legislation, on top of health care and his stimulus, President Barack Obama has now unmistakably established himself as an effective force for major change.
As many have noted, this does not seem to be helping him politically so far.
Presidential success on party-line votes seems to scare independent voters. And yet, in these highly polarized times, it would be quite a challenge to conceive an activist agenda that appeals across party lines. Perhaps it will be the challenge of Mr. Obama’s second two years.
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