WASHINGTON — Democrats racing to enact bold financial regulatory reforms are pointing to stark statistics from the recent recession in making the case for the legislation.
Briefing reporters this week, senior White House officials ticked off the cost of the financial crisis: 8.5 million jobs lost, millions of homes in foreclosure, the loss of trillions of dollars of savings and assets.
“We simply cannot become complacent to think that we have addressed any of the things that underlie this crisis,” said Diana Farrell, deputy director of the National Economic Council, which advises the president.
The fast-track strategy is girded by lessons learned during the health care debate and infused with the belief that Republicans’ unified opposition to the bill is untenable in the face of deep public anger against Wall Street.
There are signs they are right.
Republicans began the week with a united front — every Republican senator signed a letter vowing to block the Democrats’ bill.
Back to the table
But Senate Minority Leader Mitch McConnell, R-Ky., sent his troops back to the negotiating table Tuesday and sounded upbeat that an agreement could be reached that could garner Republican support.
“I’m convinced now there is a new element of seriousness attached to this, rather than just trying to score political points,” McConnell said.
The Democrats’ basic message is that the country’s regulatory framework hasn’t kept up with global financial traders’ willingness to game the system at the expense of just about everyone — institutional investors, managers of pension funds, the ordinary homebuyer.
“There was nothing natural about how we ended up in the crisis,” Sen. Michael Bennet, D-Colo., said at a news conference Wednesday. “It was a bunch of reckless practices at some of the country’s largest financial institutions.”
Among its key elements, the bill would allow regulators to do to large, nonbanking financial institutions what they can now do to banks — take them over when they get in trouble, dismantle them and sell them.
Broad new powers
Regulators would have broad new powers to look for emerging trouble spots across the global economy. And the bill would impose new restrictions on the trading of derivatives, which fed the viral nature of the crisis.
Democrats believe one of the bill’s most salable points is a new watchdog with the power to regulate consumer products such as mortgages, car loans and payday loans.
Republicans have criticized the idea, claiming it will restrict some forms of consumer credit now widely available, a point Democrats are willing to concede.
“There will be a portion of credit that should not have been part of a system that will be limited. While some would say, ‘Isn’t that a terrible thing?’ we’d say, ‘No, it was a much worse thing to put people in those homes and then end up having them in foreclosure,’ ” said Farrell, the White House economist. “It was a much worse thing to give people these credit cards and then have them go bankrupt.”
