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At the Corner of Main Street and Wall Street

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The American Prospect's Robert Kuttner hailed Obama's recent economic address on fixing our looming financial meltdown as "a remarkable breakthrough." As Kuttner rightly points out, the crucial distinction between Barack Obama and Hillary Clinton on repairing our economic woes is that Obama puts the mortgage crisis into the larger context of our recession and Wall Street's political clout when it comes to financial deregulation, whereas Clinton does not.

Both Obama and Clinton favor the Frank-Dodd Bill for fixing the mortgage crisis. This bill would enable the government to guarantee new loans from banks for families facing foreclosure, but it's not enough to remedy the situation. Obama is ready to address our floundering economy as a whole and revamp our regulatory framework without bowing to special interest groups. "Obama is one of the few mainstream leaders," Kuttner writes, "calling for capital requirements to be extended to every category of financial institution that creates credit."

By contrast, Clinton's recent speech suggests that economic issues like job losses and skyrocketing gas prices started with the mortgage crisis. In other words, the subprime catastrophe is its own isolated mess. Clinton inexplicably keeps this mess apart from the problems in the financial sector, or, in Obama speak, she separates Main Street from Wall Street.

What's all the more frustrating, as Kuttner notes, is that Paul Krugman of the New York Times can't see this distinction between the two Democratic candidates. Perhaps Krugman doesn't get the significance of Obama's FDR-ish plan for broader, modernized financial regulation. He claims to be pleased by it, and yet he calls Obama's proposals "cautious and relatively orthodox." To me, cautious and relatively orthodox would be turning to Robert Rubin and Alan Greenspan for advice (both of whom are responsible for getting us into this predicament in the first place), which is exactly what Clinton wants to do.