Bad economic news has dominated the headlines continuously since at least the spring of 2007: rising foreclosures, growing job loss, dwindling college and retirement accounts, declining tax revenues, government layoffs and cutbacks, timid investigations, rambling congressional hearings, excuses from the Wall Street crowd and their federal regulators.
Now as Wall Street reform has been passed by Congress, and heads to President Obama's desk for signature, the world's financial titans can pack up for the Hamptons and have a proper summer vacation relieved that they dodged more fundamental reform of the financial system.
Many will hail the bill, with reason - because it enacts important and commonsense measures to protect consumers and the economy. And it also represents the most significant reform of the financial system since the 1930s. The fact that this is true is what should concern us; is this the best Congress is able to do today? Don't get me wrong. I recognize the hard work, the difficult negotiations and the political standoffs that impeded progress along the way.
But this is what happens when you allow the very industry that caused the problem to buy all the front row seats at the bargaining table. If you at any time during this financial calamity thought - as I did - that it presented the best opportunity we've had in decades to align the interests of Wall Street with the interests of working Americans, then you can't help but feel like we fell short of that goal.
The proof of the bill's worth will come not from what is written in the bill, but how the bank regulators interpret the bill, write the rules and then enforce them. Community groups, like the National Community Reinvestment Coalition, have plenty of ideas about how to do this but federal regulators didn't listen to us when we warned against predatory lending in the late 1990s and later the looming subprime crisis. We have no reason to believe they will now; we'll believe it when we see it.
The most damning and persistent problem, I fear, will be frozen credit for hard-working, low-to-moderate income people and struggling small business owners - the very people who have suffered the most from the economic crisis.
We are left with no housing policy and little Congressional appetite for the next round of financial reform. Since the 1970s, the Community Reinvestment Act (CRA) has ensured safe and sound lending in working-class neighborhoods across the country, but Congress failed to improve its enforcement provisions, blatantly ignored the entire eight years of the Bush Administration and by its regulators - when the subprime epidemic spread across America. Congress also failed to expand CRA and the obligation financial institutions have to serve communities in the reform bill. Congressman Barney Frank has promised to bring CRA legislation up for a vote, but will Congress fight for it?
And -- who besides the federal government will securitize mortgages? Fannie Mae, Freddie Mac and FHA cannot continue to bear a burden created largely by Wall Street and the banking industry. Conservatives scream about the GSEs and FHA but they conveniently ignore the fact that they are the only game in town, and the private sector is missing in action. Will more taxpayer funds be needed for Fannie and Freddie? If so, it's only because the banking industry refuses to invest in America. The banks are still too big to fail, and Congress did nothing to encourage, much less mandate, they start lending again to the taxpayers who bailed them out.
And, some of the most pressing problems remain -- what about rising foreclosures, another likely real estate downturn in our future and an unemployment rate undoubtedly higher than the make-believe 9.5%? Meanwhile, cities and states are scrambling for funds for schools, for the elderly, and for basic services for all taxpayers, regardless of race or income.
These are going to be issues in November if Congress can't tackle them now.
What began as predatory lending largely contained in poor, minority and elderly neighborhoods in the 1990s was unleashed in the next decade by the power of mortgage securitization, credit default swaps, derivatives and other new-fangled financial products devised by Wall Street, where greed does not discriminate. They may pick off the low-hanging fruit first but, left to their own devices, they will eat their own.
Congress has declared victory, but let's be clear: Wall Street dodged a silver bullet, and like vampires, their wounds have begun healing quickly; they will be back feeding off of all of us - if they haven't already.