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Finance reform won't stop the high-risk gambling that wrecked the economy - and Republicans aren't the only ones to blame
This article originally appeared in RS 1111, on newsstands August 6, 2010. This issue and the rest of the Rolling Stone archives are available via All Access, Rolling Stone's premium subscription plan. If you are already a subscriber, you can click here for the archives. Not a member? Click here to learn more about All Access.
Cue the credits: the era of financial thuggery is officially over. Three hellish years of panic, all done and gone the mass bankruptcies, midnight bailouts, shotgun mergers of dying megabanks, high-stakes SEC investigations, all capped by a legislative orgy in which industry lobbyists hurled more than $600 million at Congress. It all supposedly came to an end one Wednesday morning a few weeks back, when President Obama, flanked by hundreds of party flacks and congressional bigwigs, stepped up to the lectern at an extravagant ceremony to sign into law his sweeping new bill to clean up Wall Street.
Obama's speech introducing the massive law brimmed with celebratory finality. He threw around lofty phrases like "never again" and "no more." He proclaimed the end of unfair credit-card-rate hikes and issued a fatwa on abusive mortgage practices and the shady loans that helped fuel the debt bubble. The message was clear: The sheriff was padlocking the Wall Street casino, and the government was taking decisive steps to unfuck our hopelessly broken economy.
Read Matt Taibbi's landmark investigation, "The Great American Bubble Machine."
But is the nightmare really over, or is this just another Inception-style trick ending? It's hard to figure, given all the absurd rhetoric emanating from the leadership of both parties. Obama and the Democrats boasted that the bill is the "toughest financial reform since the ones we created in the aftermath of the Great Depression" a claim that would maybe be more impressive if Congress had passed any financial reforms since the Great Depression, or at least any that didn't specifically involve radically undoing the Depression-era laws.
Get your dose of political muckraking from Matt Taibbi on the Taibblog.
The Republicans, meanwhile, were predictably hysterical. They described the new law officially known as the Dodd-Frank Wall Street Reform and Consumer Protection Act as something not far from a full-blown Marxist seizure of the means of production. House *Minority Leader John Boehner shrieked that it was like "killing an ant with a nuclear weapon," apparently forgetting that the ant crisis in question wiped out about 40 percent of the world's wealth in a little over a year, making its smallness highly debatable.
Get more political coverage from Rolling Stone.
But Dodd-Frank was neither an FDR-style, paradigm-shifting reform, nor a historic assault on free enterprise. What it was, ultimately, was a cop-out, a Band-Aid on a severed artery. If it marks the end of anything at all, it represents the end of the best opportunity we had to do something real about the criminal hijacking of America's financial-services industry. During the yearlong legislative battle that forged this bill, Congress took a long, hard look at the shape of the modern American economy and then decided that it didn't have the stones to wipe out our country's one *dependably thriving profit center: theft.
Tim Dickinson blogs about all the news that fits from the Beltway and beyond on the National Affairs blog.
It's not that there's nothing good in the bill. In fact, there are many good things in it, even some historic things. Sen. Bernie Sanders and others won a fight to allow Congress to audit the Fed's books for the first time ever. A new Consumer Financial Protection Bureau was created to protect against predatory lending and other abuses. New lending standards will be employed in the mortgage industry; no more meth addicts buying mansions with credit cards. And in perhaps the biggest win of all, there will be new rules forcing some varieties of derivatives the arcane instruments that Warren Buffett called "financial weapons of mass destruction" to be traded and cleared on open exchanges, pushing what had been a completely opaque market into the light of day for the first time.
full story Wall Street's Big Win | Rolling Stone Politics
This article originally appeared in RS 1111, on newsstands August 6, 2010. This issue and the rest of the Rolling Stone archives are available via All Access, Rolling Stone's premium subscription plan. If you are already a subscriber, you can click here for the archives. Not a member? Click here to learn more about All Access.
Cue the credits: the era of financial thuggery is officially over. Three hellish years of panic, all done and gone the mass bankruptcies, midnight bailouts, shotgun mergers of dying megabanks, high-stakes SEC investigations, all capped by a legislative orgy in which industry lobbyists hurled more than $600 million at Congress. It all supposedly came to an end one Wednesday morning a few weeks back, when President Obama, flanked by hundreds of party flacks and congressional bigwigs, stepped up to the lectern at an extravagant ceremony to sign into law his sweeping new bill to clean up Wall Street.
Obama's speech introducing the massive law brimmed with celebratory finality. He threw around lofty phrases like "never again" and "no more." He proclaimed the end of unfair credit-card-rate hikes and issued a fatwa on abusive mortgage practices and the shady loans that helped fuel the debt bubble. The message was clear: The sheriff was padlocking the Wall Street casino, and the government was taking decisive steps to unfuck our hopelessly broken economy.
Read Matt Taibbi's landmark investigation, "The Great American Bubble Machine."
But is the nightmare really over, or is this just another Inception-style trick ending? It's hard to figure, given all the absurd rhetoric emanating from the leadership of both parties. Obama and the Democrats boasted that the bill is the "toughest financial reform since the ones we created in the aftermath of the Great Depression" a claim that would maybe be more impressive if Congress had passed any financial reforms since the Great Depression, or at least any that didn't specifically involve radically undoing the Depression-era laws.
Get your dose of political muckraking from Matt Taibbi on the Taibblog.
The Republicans, meanwhile, were predictably hysterical. They described the new law officially known as the Dodd-Frank Wall Street Reform and Consumer Protection Act as something not far from a full-blown Marxist seizure of the means of production. House *Minority Leader John Boehner shrieked that it was like "killing an ant with a nuclear weapon," apparently forgetting that the ant crisis in question wiped out about 40 percent of the world's wealth in a little over a year, making its smallness highly debatable.
Get more political coverage from Rolling Stone.
But Dodd-Frank was neither an FDR-style, paradigm-shifting reform, nor a historic assault on free enterprise. What it was, ultimately, was a cop-out, a Band-Aid on a severed artery. If it marks the end of anything at all, it represents the end of the best opportunity we had to do something real about the criminal hijacking of America's financial-services industry. During the yearlong legislative battle that forged this bill, Congress took a long, hard look at the shape of the modern American economy and then decided that it didn't have the stones to wipe out our country's one *dependably thriving profit center: theft.
Tim Dickinson blogs about all the news that fits from the Beltway and beyond on the National Affairs blog.
It's not that there's nothing good in the bill. In fact, there are many good things in it, even some historic things. Sen. Bernie Sanders and others won a fight to allow Congress to audit the Fed's books for the first time ever. A new Consumer Financial Protection Bureau was created to protect against predatory lending and other abuses. New lending standards will be employed in the mortgage industry; no more meth addicts buying mansions with credit cards. And in perhaps the biggest win of all, there will be new rules forcing some varieties of derivatives the arcane instruments that Warren Buffett called "financial weapons of mass destruction" to be traded and cleared on open exchanges, pushing what had been a completely opaque market into the light of day for the first time.
full story Wall Street's Big Win | Rolling Stone Politics
I bet you're right.
