Obama and Bank reform

So, Obama has managed to get through his reform of the Banking industry through the Senate, and this bill will go through the reconciliation service following on from a similar, but different, bill passed by the House in December. Ultimately, he has managed a remarkable thing; getting some very radical changes to fundamental parts of American life through Congress in the first few years of his presidency.

Great analysis of the core parts of the bill from Robert Peston here. Interestingly, the Senate vote largely went along party lines, except for 3 Republicans who jumped ship (the vote was 59 to 39). It was close – a vote to decide to end debate and vote on the bill only passed by 60-40. There will be plenty of haggling yet to come, but the most useful part for G&P students will be the points-of-view from the two main sides in the debate – Republicans, largely on the side of the Banks, and the Democrats who claim largely to be on the side of the American public (“main street, not wall street”).

Of course, there is the argument that what benefits the banks, and what give them the ability to make money and grow will benefit the American public in the long-run. Set against that is the problem that these banks have been bailed out to the tune of billions of not trillions of dollars thanks to the Troubled Asset Relief Program, or TARP, which was made necessary by the credit crunch.

Banks have been doing their best to prevent the bill from coming in to being effectively (according to this piece in the left-leaning Observer), and Republicans have been saying that Obama’s plan will severely hit bank’s ability to make money in creative ways because government oversight will limit it. This piece by the Wall Street Journal suggests that it’s all a piece of political theatre by the Democrats to shore up their vote in November’s mid-terms, and not really valuable as an exercise in banking reform. Although, arguably, it’s just another strand in the stop-the-bill movement. The extraordinary right-wing commentator Rush Limbaugh claims here that it will drive business out of the country, and also gives regulatory power to the executive from the legislature.

Essentially, big business = good, big government = bad.

By contrast, Democrat Senator for Montana writes in the left-leaning Huffington Post that the Bill is a win for “main street” against the banks too big to fail. He trumpets the benefits of the Bill, and also reveals that he was against the bailouts of the banks (“because I don’t believe in bailouts”) despite the fact that this action possibly saved the global banking system from collapse.

In short, big government = good, big business=bad.

Elsewhere, the NY Times writes that some on Wall Street are phlegmatic about the whole thing, happy that the reform won’t be too punitive and can be softened, while accepting that some reform was inevitable.
All of which is useful for G&P students when answering a question on the opinions of the two different parties, on Congress and the passage of law, and on the power of the Presidency.