Invigorated, Dems Charge Forward on Financial Reform

Senator Dodd leads the way. Is his plan any good?

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Senator Chris Dodd's financial regulatory reform bill passed the Senate Banking Committe on Monday in 22 blistering minutes and will now go to the Senate floor, where it is expected to face significant debate. Now that health care has passed, Democrats are free to pick up a new top issue. We evaluated the momentum building behind immigration reform. Now let's look at what's happening with financial regulatory reform. Could it be the new top issue for President Obama and Congressional Democrats?

  • Why Dodd Rushed It Through The Atlantic's Dan Indiviglio suspects that Dodd wanted to avoid a lengthy markup process and wanted to "shield Senate Banking Committee Democrats from having to take hard votes." He concludes, "So really, yesterday's vote, while an important procedural step, isn't so significant in terms of actually making tangible progress towards a final bill in the Senate. Instead, it just indicates that the committee punted to the floor."
  • Dodd's Bill 'Nearly Meaningless' Mother Jones' Kevin Drum sighs, "Unless I'm badly mistaken -- which is always a possibility -- this is nearly meaningless." Why? "The whole thing is hardly worth doing unless it also contains some broad, deep, and mandatory limits on leverage. And as near as I can tell, that's almost entirely missing from the bill."
  • Don't Put Geithner on This  EconoBlogger Simon Johnson warns that Teasury Secretary Tim Geithner isn't up to the task. "The sticking point is 'too big to fail.' Mr. Geithner's Treasury (and Senator Dodd's bill) continue to rely on the complete illusion that a resolution authority (i.e., an augmented bankruptcy process for banks) based on US law will do anything to help manage the failure of a large cross-border financial institution. It simply will not." The Atlantic's Joshua Green reached a similar conclusion.
  • Dems Unifying For Reform  The Washington Independent's Mike Lillis notes that Dodd got even conservative, bank-friendly Democrats on his committee to vote for the bill. "Dodd's ability to rally all the Democrats behind the bill is no small achievement -- that Senate Democrats, for once, have shown some party discipline."
  • Will Dems Follow Through on Needed Improvements? The American Prospect's Tim Fernholz gets skeptical. "I've been relatively optimistic about this bill and the prospects for improving it," he writes. "Now, though, I am a little nervous about it. The rhetoric from Dodd, and from President Obama, belies the fact that this bill needs significant improvement." Fernholz explains why the bill is a good first step but far from sufficient.
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