Dems Repeat Their Failed Health Care Strategy and Preemptively Surrender on Plan to Protect Consumers
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Maybe so. But how about at least trying before waving the white flag? Instead, Dodd, in the hope of attracting Republican votes, appears to have preemptively surrendered. But there's no evidence that Dodd's concession has achieved anything other than kneecapping the bill. Democrats have mastered the art of negotiating against themselves.
It's hard to believe that even the messaging-challenged Democrats could fail to frame to their advantage a bill that would prevent banks from abusing the public and engaging in the same practices that brought on the financial catastrophe taxpayers have paid so high a price for. Instead, the attitude seems to be, why even try?
That's assuming, of course, that a powerful consumer protection agency is something Democrats -- including those in the White House -- think is important enough to fight for.
"Here lies the crux of the problem," write Simon Johnson and Peter Boone. "The Obama administration lacks an inner core of smart, well-informed advisers who are deeply skeptical of big banks and eager to do whatever it takes to break a cycle that points to financial and fiscal doom."
So how likely is another ride on the doom loop of financial crises? Johnson and Boone lay out some sobering statistics: Fifteen years ago, the combined assets of our six biggest banks totaled 17 percent of our GDP. By 2006, that number was 55 percent. Right now, it stands at 63 percent.
In the Bloomberg interview, Dodd claimed to still support the so-called Volcker Rules banning proprietary trading and capping the size of banks, as does, we're told, Obama. But Johnson and Boone argue that even the Volcker Rules wouldn't make much of a difference -- and that something much bolder is needed.
"It is still possible that the White House could go all-in against the distorted incentives at large banks and the corrupted regulatory structures that have created our 'doom loop,' and make this the central campaign issue for November," they write. "Branding opponents as supporters of too big to fail could get traction, at least if led by an articulate and impassioned president."
Well, we know he'll be articulate, but his passion for reining in the banks remains to be proven.
The Senate Banking Committee is expected to take up Dodd's proposal this week. Some strong leadership from an "impassioned" Obama could shoot down this deflated trial balloon and ensure that what the committee sends to the full Senate to vote on is actually closer to what Obama called for last year -- and, indeed, closer to the stronger package, including a stand-alone consumer financial protection agency, that passed the House in December.
During last week's health care summit, President Obama very cogently explained why piecemeal health reform won't work -- connecting the dots between the need to prevent insurers from denying coverage for those with pre-existing conditions and the need for universal coverage.
How about doing the same for an issue that is even more sellable to the public? Of course, reforming our broken health care system would have been sellable, too -- if the White House had not ceded the messaging playing field to the Republicans for most of the last year.
The good news is, there's still plenty of time to do for financial reform what Obama should have done for health care -- go out and sell a clear and specific package. And he needs to make the point that, much like health care, doing it incrementally won't work. Leaving too-big-to-fail banks to continue doing business as they have been is like operating on a cancer patient and taking out only half the tumor -- the disease is guaranteed to come back. And eventually prove fatal.