Paul Krugman begins this morning's column this way:
So here's the situation. We've been through the second-worst financial crisis in the history of the world, and we've barely begun to recover: 29 million Americans either can't find jobs or can't find full-time work. Yet all momentum for serious banking reform has been lost. The question now seems to be whether we'll get a watered-down bill or no bill at all. And I hate to say this, but the second option is starting to look preferable.
Krugman says he would be satisfied with the House bill, but that the need to bring moderate Democrats and at least one Republican on board in the Senate could lead to a severely watered-down bill, in particular one without a Consumer Financial Protection Agency. Instead of accepting such a deal, he says:
In summary, then, it's time to draw a line in the sand. No reform, coupled with a campaign to name and shame the people responsible, is better than a cosmetic reform that just covers up failure to act.
Krugman recognizes that this is structurally different from what he said about health care reform. In Larissa MacFarquhar's recent profile of him in The New Yorker, discussing health care, he said, "There's a trap I've seen some people fall into -- you let your vision of what should be get completely taken over by what appears possible right now -- and that's something I'm trying to avoid." Now he's avoiding it.
I generally enjoyed that article. For one thing, I remembered that Krugman and I had a similar perspective on the 2008 Democratic primary (Obama was the most conservative of the major candidates and spouted a lot of "feel-good stuff about hope and dialogue and reconciliation"); both of us supported Edwards, although he switched to Clinton when Edwards dropped out and I switched to Obama.
For another, there's something else we have in common. Explaining why, after the fall of the Berlin Wall, he didn't set out to consult to post-Communist or developing countries, Krugman says, "I know what Jeff [Sachs] does and I couldn't do it. Taking transport planes, living on yak meat for days -- no. But I do write faster than anybody. You've got to figure out what you should be doing."
Anyway, getting back to this morning's column -- I'm with Krugman. There are certainly things that would probably make it into a compromise bill that are better than nothing. Resolution authority would be better than nothing, although far from a perfect solution. Systemic risk regulation would be better than nothing -- though perhaps not much better, depending on who is in charge of it. But frankly without the CFPA and without a real solution to banks that are too big to fail, it seems to me we will have avoided solving the biggest problems.
If we want change, someone has to be willing to stand up for it. If you want to win a negotiation, you have to be willing to walk away. If you can't do that, you will get rolled on every issue. The Democrats need to force the Republicans to make a public choice on the CFPA, instead of negotiating against themselves and taking the issue off the table. Voters will be upset if Congress does nothing about the financial system, but the Democrats should have the courage to point out why they couldn't pass anything. Taking a stand on consumer protection should not be that hard a position to take.
Cross-posted from The Baseline Scenario
I'm not sure I understand his willingness to fight to the last drop of our blood.
What he does NOT have is a nice financial system.
None of us do.
The Republicans have made it clear that they consider walking the best alternative to negotiated agreement (BATNA). In fact, they have made it clear that negotiated agreement is only the last resort. They can do this because the Dems seem to respect it, even if the rest of the rational world doesn't.
Take Republican intransigence as a given. Democrats either have to find a way to make Republicans negotiate in good faith, or they have to find their own BATNA, such as, oh I don't know, reconciliation maybe?
If the final bill includes those core reforms but does not include the CFPA, it's still a good bill.
We need a CFPA to protect consumers on an ongoing basis, and the CFPA must have enough regulatory muscle to counter the influence money buys.
This is just another case of special interests having their way over the best interests of the American people.
The will of the senate is the will of the special interests.
http://www.fairelectionsnow.org/volunteer/petition (FENA)
http://change-congress.org/
sign the petition
Now they have the supreme court on their side as well....if democrats dont energize quick , goodbye freedom and america as we kow it!
I said good-bye to the Supreme Court just over 9 years ago.
I said good-by to America as I knew it 8 1/2 years ago.
I witnessed the emergence of raw Imperial America 7 years ago.
I said good-bye to the Democratic party and the American people as I thought I knew them about 6 years ago.
I said good-bye to the Constitution around 4 years ago.
If you['re only now starting to get really worried, you just haven't been paying attention.
Does 0bama have the PASSION to CLEAN UP WallStreet
0bama surfed into office on a wave of financial panic, but Americans are still looking for life preservers.
His Priorities:
1. Health Care
2. Green Technology
3. Afghanistan
We still have a broken credit system, failure “of and to” regulate, and misuse of derivatives for theft. Will the tradersters or investors be the FUTURE SOUL of the markets.
0bama doesn't have to be knowledgeable in all things if he surrounds himself with the right people, but Financial Reform was left in Summers&Geithner’s hands who helped built THIS CRISIS!
Summers loyal to WallStreet facilitated unregulated derivatives in 1999. Geithner lost credibility with his hired circle of WallStreet professionals.
These two choices reflect 0bama’s lack of understanding of WallStreet’s sucking of Value from the REAL Main Street Economy.
Why not Brooksley Born, Phil Angelides, or John Allison? However, 0bama did have good sense to pick Volcker to lead his economic advisory board and Volcker's list of reforms.
But NOW the SENATE is ripping the Volcker plan apart to meet the desires of WallStreet.
We have a quagmire economy where WallStreet drains the REAL ECONOMY, NOW fully financed by government+FED. They have Automated Software to steal in nanoseconds (billionth second)!
But Health Care may pass in another month or two!
http://www.marketwatch.com/story/health-care-bill-may-come-down-to-house-democrats-2010-02-26#comment3666044
Much education is still needed.
I don't agree with Krugman--for he's a part of the monied "establishment".
Spread the word on REAL REFORM:
http://www.pnhp.org/
He writes of economic crisis in past tense and ranks it second all time---Crisis is ongoing and estimates as to its severity are extremely premature from an historical sense...
I would not under-rate this one as of yet...As Professor Krugman himself explains no meaningful or effective reforms have been passed...And all the bubbles are re-inflating.
I also don't agree with this strategy of conceding on financial reform efforts...too much is at stake.
This is lifted verbatim from last week's New Yorker profile - why no attribution?
Uhhh...what?