Six bank regulation policies. Four reform themes. Three rhetorical hedges. Two "failure of responsibility" scolds. One "false choice" rejected. What do you get when you add it all up? An important, if predictable, financial regulation address.
President Obama's banking reform speech in New York City today was a bit like an opening lecture for Financial Reform 101: low on fiery rhetoric, high on professorial platitudes, and more wide-ranging than deep. (Read it here.)
For those counting at home, the president named six major policies: resolution authority to wind down failed banks; a bank tax; the "Volcker Rule" to shrink large banks; derivatives reform; a consumer protection agency; and new shareholder powers. He grouped these policies under four large themes: protecting banks from themselves; protecting consumers from banks; shining light into the shadow banking industry; and giving investors say on executives' pay.
But it's noteworthy that not all of the policies he mentioned are actually in the bill. For example, he calls for a bank tax to cover the losses from TARP (even thought the losses in TARP aren't from Wall Street banks). Sen. Chuck Schumer is running around Washington trying to drum up support for such a tax, but it is not in the bills. Ditto for the details of the Volcker Rule, which would attempt to limit banks' risk-taking. Bank regulators are instructed in the bill to determine how to implement the Volcker Rule, says Doug Elliott of the Brookings Institution, but we don't know what those rules will look like.