Republicans And Financial Regulation: Making Herbert Hoover Look Good
President Obama said Wall Street had “hurt just about every sector of our economy” and again pressed the case for tighter regulation. The first test of the administration’s overhaul effort will come Monday when the Senate majority leader, Harry Reid, is to call a procedural vote to try to stop a Republican filibuster.
Republican filibuster? To kill legislation to prevent Wall Street from plundering Main Street? Really?
Lately Wall Street has been America’s Field of Bad Dreams, so maybe we do need some regulation there. In order to explore that, as my old civil procedure professor used to say, let’s ask, “Who did what to whom?” And when know that, we’ll know if it was bad behavior, like, say, stealing. Or fraud. Or a complicated crime of deception. And if it was, then we should regulate it so it doesn’t happen again, because we don’t like it when innocent people get screwed because of the greed of the already fabulously wealthy. So, let’s reduce it to very basic terms:
Goldman Sachs said it lost money in the mortgage mess. Then some of their favorite clients made money in the mortgage mess. More money than they lost. And they made it betting against instruments Goldman Sachs created and traded in. And somehow this sent a boatload of money over Goldman’s way. And they thought it bothersome to tell their other clients or, really, anyone about this little trick, so they kept it to themselves. But they wrote emails about it and the SEC found the emails. And now the SEC is suing them. I guess the SEC is trying to make up for that Madoff thing, but o.k., at least they’re doing their job now. And it’s good the SEC has woken up because those instruments lead to the worst financial meltdown since the 1930’s, and brought misery to millions and millions of America.
Isn’t that pretty much it? I think that’s pretty much it. It’s more complicated, of course, when you add in all the smoke and mirrors, but law enforcement has been kind enough to strip away all that smoke and all those mirrors for us, and bring it all to the court to sort it out. And that will be good because a jury will decide, based on the evidence, “who did what to whom?” I wonder where we’ll find a jury of Goldman Sachs’s peers, but that’s another column.
To the moment: Republicans want to prevent the regulation of this sort of behavior. Republicans want to constitutionally regulate flag-burning, gay marriage, and abortion, but not statutorily regulate these Wall Street grifters? Chris Dodd called them on this obstructive nonsense as eloquently and forcefully as Big Daddy in Cat on a Hot Tin Roof: There ain’t nuthin’ more powerful than the smell of mendacity!
So, what does the title to this piece mean? Well, the difference between Senate Majority Leader Mitch McConnell and President Herbert Hoover is that before the Great Depression sunk his legacy, Hoover – the model of efficiency – was rightfully known as The Great Engineer. And while the common trope was that he was a do-nothing in the face of economic disaster, a closer look at the record shows he campaigned on tariffs as an affirmative approach to warding off the depression storm clouds. When elected he and fellow Republicans passed the Smoot-Hawley Tariff Act, which just made things a whole lot worse. Hoover got it wrong, but he did something. At least he tried. McConnell is a mere obstructionist.Click here for reuse options!
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