Tales from the Trail

White House commission wades into “Deep Water”

OILSPILL-BP/COMMISSIONThe great thing about presidential commissions is that they can soberly consider complicated matters and then offer unvarnished reports on what to do. The tough part is when that information rockets around Washington, as occurred after a White House commission issued its final report on the BP disaster in the Gulf of Mexico.

The “Deep Water” report, apparently titled in reference to the doomed BP Deepwater Horizon rig, blames the deadly blowout and oil spill on government and industry complacency, and recommends more regulation of offshore drilling and a new independent safety agency. But as my colleague Ayesha Rascoe reports, the commission lacks the authority to establish drilling policies or punish companies.

Within minutes of the report’s release, and even as commission co-chair William Reilly was bragging about bringing the report in on time and under budget, interest groups started the PR barrage, with industry critical and environmental outfits largely complimentary. Two Democratic members of Congress said they’d introduce legislation to implement the commission’s recommendations.

Will that legislation go anywhere? Industry analysts are doubtful. To get an idea of how much action can be prompted by White House panels, it’s useful to take a look at two previous ones.

OILSPILL-BP/COMMISSIONThe 911 Commission (formally called “The National Commission on Terrorist Attacks Upon the United States”) was perhaps the ultimate in gracefully delivering its hard findings: “… on that September day we were unprepared.  We did not grasp the magnitude of a threat that had been gathering over time. As we detail in our report, this was a failure of policy, management, capability, and – above all – a failure of imagination.”

from Summit Notebook:

What if there were no “too big to fail”? Fed’s Hoenig has a vision

USA/Democrats and Republicans alike on Capitol Hill say they want to toss out the concept of "too big to fail" in the financial regulation reform they are tussling over. That way if a financial firm is going to go under, it will go under, with no thought for a taxpayer handout.

Since the concept of "too big to fail" has yet to be erased by law, and its demise yet to be tested by a failing financial institution, it was interesting to hear how Kansas City Federal Reserve Bank President Thomas Hoenig envisioned the financial industry without that concept to lean on.

Looking back in time -- "If you had a clear resolution process, and you had clear rules on leverage," a domino-like string of large bank failures may have been less likely.

The First Draft: should Obama embrace new structural reforms?

Sen. Christopher Dodd of Connecticut and Columbia University economist Jeffrey Sachs are two guys who think President Barack Obama better embrace new structural reforms if he wants a growing economy that isn’t hard-wired to go bust.

Dodd, a Democrat fighting for his political life at home, proposed sweeping regulatory legislation this week that would curb the Federal Reserve’s bank oversight powers, strengthen consumer protection and keep a sharp eye out for systemic problems like housing or stock market bubbles.

The 1,136-page measure reflects Obama’s policies in some ways — for example, it supports the White House call for a Consumer Financial Protection Agency — but it also charts new regulatory waters.

“What we have (now) is a hodgepodge that has grown over the last 80 years, some of it dating to the 19th century and early 20th century regulatory structures,” Dodd told MSNBC.

First Draft: Obama online

President Barack Obama gets a bit of a reprieve from the Secret Service shield on the presidential use of Internet technologies and will answer questions submitted online from the public at 11:30 a.m. today.

The White House Web site has been taking questions in categories that include education, home ownership and jobs.

Activists for legalizing marijuana managed to flood the financial stability category with queries such as: “Has the administration given any thought to legalizing marijuana, as a cash crop to fuel the economy?” Let’s see if that one gets picked for a presidential response.MEXICO/