Passing financial reform is no miracle
Jonathan Chait over at TNR is strangely amazed that financial reform may happen:
What’s happening with financial reform right now is unlike anything that’s happened since I’ve been following American politics. Look at the fundamentals of the issue. This is a matter where a massive industry — one that accounts for close to half of all corporate profits — is adamantly opposed to new regulation. The merits of the issue are so mind-numbingly complex that even economists and policy wonks sound distinctly fuzzy on the details. Throw in a Republican Party that had pursued, with evident political success, a policy of total obstruction. I’d tell you this was a formula either for defeat or a toothless reform.
And yet a substantial reform now appears close to inevitable. It’s not a toothless reform — a set of derivative regulations more hawkish than anybody could have dreamed possible a couple weeks ago just passed through the Agriculture Committee. It’s one of those strange moments when the normal laws of politics have been suspended.
Me: I am more amazed that given the magnitude of the financial crisis and the level of public rage, the banks weren’t broken up and turned into quasi-public utilities. But Wall Street can thank the White House for that. After passing the stimulus, it decided to focus on healthcare. Time passed, passions ebbed, and the lobbying effort cranked up. But the aftermath of the crisis (+Goldman) always made it likely that reform would pass.