Wall Street always knew financial reform was coming. The big banks never really thought there was a chance of killing it, not that they really tried to. In fact, once the effort moved into 2009, they wanted it over sooner rather than later. The longer the process dragged out, the greater the chance of something crazy popping up and the more political and profit damage they took. For instance: The “break up the bank” movement was almost successful. As it is, the Volcker rules and derivatives reform may end up far tougher than their worst-case scenario.
But now things are going pear shaped. House negotiators want big banks to pay for any future wind-down of Fannie and Freddie and are trying to slip in a bank tax to repay TARP funds. And the hits keep on coming. Democrats have concluded that with the unemployment high and Obama’s approval falling, bashing the banks is the best ticket they have in the November midterms. Liberals have always suspected that despite Wall Street grousing about reform, they were actually quite happy that it was not tougher. Maybe, but now the complains are real.