One of the president's top economic advisers pledged a major push on financial regulatory reform once health care legislation is done with, citing the need to "not live again through" the perils of the financial industry's collapse.
"We're coming to the closing chapter of health care," said Austan Goolsbee, a close Obama confidant and member of the president's Council of Economic Advisers. "The president has been pretty clear that when health care is done he wants financial regulatory reform, the holding accountable of financial institutions, and now he's setting the stage [for that]."
An energetic presence on the White House's economic team (in addition to being, as rumored, one of its more forward-looking thinkers), Goolsbee tackled a wide variety of financial policy topics in an interview with the Huffington Post. Beyond laying out the timeframe for a ramped up effort on regulatory reform, he also hinted at details of what the administration hoped would emerge in the final package.
Asked about news that Senate Banking Committee Chairman Chris Dodd (D-Conn.) was considering dropping plans to create a wholly independent Consumer Financial Protection Agency, Goolsbee reiterated that the president wanted the new body (tasked with protecting consumers from credit card, mortgage and financial product abuses) to stand on its own.
"The president has always said he thought a consumer authority was important, that there is a tendency when it is spread over seven different agencies at it is now -- when nobody's primary responsibility is that -- that it can fall by the wayside, as you saw in past years," Goolsbee said, while cautioning that he had not read Dodd's remarks. "That's certainly central in that component of the president's white paper, that [the CFPA] being spread over seven agencies is not a good idea."
News of the CFPA's potential peril has not been well received among market-wary economists or progressive political activists, who see it as another step in the watering down of the broader consumer protection objective. One official who has worked extensively on regulatory reform negotiations suggested to the Huffington Post that it might be better for legislation to fall by the wayside than to pass something that would be ineffective.
At the same time, the president gave this official and others a bit to cheer about this past week when he announced a new tax that he wanted levied on big banks as a means of collecting un-repaid TARP funds. Goolsbee called the proposal a "sensible" approach to getting money returned to the taxpayer. Projected to bring in up to $117 billion, the recollection measure is also required under the statute of the TARP. All of which, Goolsbee said, makes criticism from some conservatives and the banking lobby (mainly, that the tax will be passed down to consumers and shareholders) all the more difficult to rationalize.
"[These banks] are flush with profits. They're talking about setting record bonuses. When they announced those things there was no discussion about those bonuses costing consumers or reducing lending," Goolsbee said. "So I find it a little unusual that when asked to pay back the money that the government and the American people are owed for the rescue, that now the argument is 'Oh, they don't have the money.'"
Pressed as to why it took the president so long to announce this tax -- and, in the process, adopt a populist approach to the banks that many in his party have long pined for -- Goolsbee replied:
"I don't think the president has changed. His emphasis from the beginning was he wanted accountability from the banks. We had to get through a period of rescue, we're getting through a period of health care, we're now putting direct focus on, our key priority is, financial regulatory reform, and people are starting to notice that."