While Congress is up to its neck wrangling with health care reform, the financial wizards of Wall Street are greasing the skids for a return to the high profits seen before last year’s financial meltdown, highlighted by the failure of Lehman Brothers a year ago this week. President Obama went into the den of Wall Street on Monday with the warning that the public would not stand for more reckless behavior.
“It’s neither right not responsible after you’ve recovered with the help of your government,” the president lectured to the financial community, “to shirk your obligation to the goal of wider recovery, a more stable system, and a more broadly shared prosperity.” To make certain the Wall Street community heard his words, he emphasized the nation’s lack of tolerance for irresponsible practices and warned them not to hinder his and Congress’ effort to pass needed reforms.
“We will not go back to the days of reckless behavior and unchecked excess that was at the heart of this crisis ... Those on Wall Street cannot resume taking risks without regard for consequences.”
But the president has a problem. His reform initiatives have stalled, primarily because Democratic leaders are tied up with health care reform, but also because the financial services industry and their lobbyists are fighting the reforms with the help of big business — and many Republicans sympathetic to big business are spouting false worries in an attempt to stymie reform.
“We must be wary of the reality that — in an attempt to address yesterday’s failures — Congress will put in place regulatory schemes which will fundamentally undermine risk taking,” said Republican Sen. Judd Gregg of New Hampshire, as if taking unnecesarry risks with the public’s investments and savings were something most Americans were eager to accept.
Sen. Gregg and his Republicans opposing financial reform are off in far right field on this issue, and the GOP needs to tread carefully if it thinks the public is ready for the financial community to have a free reign in establishing a system which he can, once again, regulate itself — exactly the type of hands-off regulation, initiated largely under former President George W. Bush, that lead to the current crisis.
Anticipating criticism against more government regulation the president had an apt response. “Do you really think that the absence of sound regulation one year ago was good for the financial system?” he asked. “Do you believe the resulting decline in markets and wealth and unemployment, the wrenching hardship that families are going through all across the country, was somehow good for our economy?” Exactly. Free market practices aren’t always the best thing for the economy. Government regulation has its place in monitoring certain sectors of the economy, especially the financial sector, to main a stable and prosperous system.
Isn’t it odd that the Republican Party’s rejection of almost any government regulation and its blind praise of the free market makes party leaders unable to see — even though the crisis has yet to fade from our daily lives — the damage done by the very policies they embrace?
As the St. Albans Messenger wrote recently, “it doesn’t take much insight to understand that a migrant farmer making $14,000 a year should not be able to walk out of a bank with a loan for a $720,000 home (true story). It doesn’t make sense that piling a whole bunch of these loans together makes it more appealing. It doesn’t make sense for the financial sector to all of a sudden constitute 41 percent of domestic corporate profits — up from 16 percent in 1985. It doesn’t make sense for a CEO to take away tens of millions in bonuses when the company is bankrupt.
“The American people have the right to expect its government to take the corrective action necessary to avoid the sort of calamity that almost took us over the brink of disaster. We have the right to expect balance and moderation. And we have the right to expect our leaders to tone down the rhetoric of destruction and work to establish the rules necessary to give us the sort of confidence we lack.”
Hopefully, Republicans throughout the country will rein in those party leaders who would give the financial industry enough rope to hang us all again, and will instead choose to work with Democrats to embrace reforms that safeguard Americans’ savings and investments. Contrary to Sen. Gregg’s premise that high risk is necessary, the financial industry can do its business just fine by acting responsibly with the public’s personal investments.