Republicans like to pretend that they had nothing todo with the enormous bank and insurance bailouts of 2008, forgetting that mostof them voted to support the "troubled asset" program, and that theauthors of the program were officials of the George W. Bush administration.
Rather than merely disowning those actions, the bestcourse is to ensure that we avoid future subsidies to the undeserving rich.That means more regulation and smarter regulation, not lessand a directrepudiation of arguments advanced by politicians of both parties in thenot-so-distant past.
Today's ideological divide is between Republicanswho encourage anti-government fervor and market worship, and Democrats whoinsist that government can and must balance corporate power by acting whenmarkets fail. No honest observer can still believeas many once didthat the unboundself-interest of financiers will correct excesses and direct capital to thebenefit of the broader economy automatically. No less a libertarian ideologuethan Alan Greenspan, the economic "maestro" who drew his inspirationfrom the writings of Ayn Rand, admitted almost a decade ago that such blindfaith was naive and dangerous.
So it is important to cut through the fog ofmilitant ignorance represented by the Tea Party movement. If the publicactually wants to stop bailing out rich brats who make stupid and destructivebets in the Wall Street casino, government must be empowered to overseederivative trading. And if the public wants a national economy that providesdecent jobs and useful goodsrather than super-profits for financial firmsthengovernment should encourage production and construction while sharplyregulating speculation.
Question the Bankers
Skepticism about the motives and wisdom of thebankers is essential if we are to avoid suffering from their inevitablemistakes and crimes. Until the onset of the crisis, in 2008, the broadpolitical assumption was that the reigning financiers were too smart and tooknowledgeable to be questioned, let alone arraigned.
Even in the wake of Enron, those "masters ofthe universe" were permitted to pursue whatever deals and schemes theywished, without accountability or transparency, because they told us thatpublic interference would ruin the prosperity they had brought us. At greatcost, we have learned otherwiseor should have. The full indictment is yet tobe handed up, but its particulars will range from irresponsible misdemeanorsand small-time scams to unprecedented billion-dollar larcenies.
Discredited as the financial powers are, theirwealth alone continues to provide them with wildly disproportionate influenceover the political process. Given the complexity of the modern globaleconomyand the issues of derivative trading, consumer protection and thewinding down of too-big failuresit will be difficult for voters to judge whatqualifies as true reform. Fortunately, there are experts with years ofexperience in the markets who seek to promote the public interest instead ofgaming the system.
Among their basic recommendations are simplificationand transparency in the financial markets, decreased leveraging, expandedregulation, permanently restrained interest rates and an independent consumerprotection agency. At the very least, say independent experts such as RobertJohnson, the former chief economist of the Senate Banking Committee, we mustprohibit institutions protected by federal deposit insurance from undertakingdeals that involve huge risks.
Moreover, we must end "too big to fail" byensuring that government has the power and resources to dismantle suchfirmswithout disastrous disruption and without enriching those who gambleblindly, expecting taxpayers to reimburse their losses.
Democrats sound more serious than Republicans inconfronting these existential challenges to the economy, but will they go farenough? Unless they can pass the necessary minimum reforms, we may someday findourselves facing a worse crisisand regretting that we didn't restrain thebankers when we had the chance.
%uFFFD 2010Creators.com
