Don’t interpret passage of the watered-down Kanjorski amendment as the peak of the “break up the banks” movement. It may be about to get some new allies on the right, folks tired of Big Government, Big Money and crony capitalism.
For the moment, though, it was arguably the best that Representative Paul Kanjorski, a Pennsylvania Democrat, could have gotten through the House Financial Services Committee. All the committee Republicans and even some of the Democrats voted against it. And even in its much-diminished state, the Kanjorksi amendment would likely be weakened further in the Senate. At the same time, the Obama administration seems little interested in such pre-emptive powers.
Wall Street, however, is hardly getting any more popular with Main Street. The Goldman Sachs Apology Tour is evidence of that. And there are mid-term elections in less than a year. Republican candidates will probably do well as high unemployment continues to drive voter anger at incumbents. As Gallup diplomatically puts it, “Republicans seem well-positioned to win back some of their congressional losses in 2006 and 2008.” More accurately, fear of losing the House is now running high among congressional Dems.
And all those new Republicans are likely to be infused with the ethos of the Tea Party movement: anti-TARP, anti-Fed (the House GOP is already there on this), anti-bailouts and anti-Wall Street. It could be a group of newcomers, as John McCain recently said, that is populist, protectionist when it comes to China and the yuan and pro-financial regulation.
Sarah Palin could be a harbinger. Although she diligently promotes the wonder-working power of Reaganomics in her autobiography, she also warns about “the return of corporatism – government collusion and co-option of big business.”
On the web, right-of-center bloggers wrote favorably of a recent proposal by Bernie Sanders, the socialist independent senator from Vermont, to break up the banks.
Even among conservative intellectuals, there is little love for an unrestrained Wall Street these days. University of Chicago economist Luigi Zingales argues that “the finance sector’s increasing concentration and growing political muscle have undermined the traditional American understanding of the difference between free markets and big business.” Like a 21st century Teddy Roosevelt, Zingales would use anti-trust law to disperse financial power.
And one veteran Republican politico says he would be surprised if the 2012 GOP nominee wasn’t far tougher on Wall Street than President Barack Obama.
So it isn’t hard to imagine that the next incarnation of Congress — filled with “free-market populist” Republicans — might take another look at the state of Wall Street and conclude, as has Alan Greenspan, that any firm too big too fail really is too big to exist.