As Matt Yglesias himself admits, the regulatory reform bill currently making its way through the Senate won’t actually do anything to prevent another major financial crisis or fundamentally alter the way Wall Street works, nor will it stave off the need for taxpayers to ultimately foot the bill for the mistakes of some asshole investment banker. Instead, certain provisions of the legislation dear to the Washington wonk’s heart, Yglesias argues — in this case “resolution authority,”granting the president greater power to seize control of firms in the name of economic stability — hold out the “possibility of coping with the aftermath of such failures in a politically and economically viable way” (emphasis original).
For those that don’t speak Washington: the State would still intervene to prevent major disruptions to the economic status quo under Financial Reform, still move to prop up failing financial firms whose executives would have no compunction pushing old ladies into oncoming traffic if they could somehow turn the practice into a CDO, but its efforts on the behalf of the financial establishment — the ruling elite, if you prefer — would be somewhat more deft, perhaps a little less ostentatious.
The selling point of this “reform” (scare quotes justified), other than the presumed diminishing number of pitchforks at lawmakers’ constituent meetings?
“[T]he three people whose practical experience has positioned them to know what kind of authority the Treasury Department needs to deal with a financial crash are [Henry] Paulson, Tim Geithner, and Larry Summers and they all think this will work. That’s something.”
This is typical Yglesias. Rather than really argue for granting the president resolution authority on the merits, our progressive intellectual is more interested in impressing his readers will all the other Really Smart members of the political establishment who think just like him. That you wouldn’t trust these people with the remote to the TV, much less the reins to the economy, is no matter — they’re powerful! And as Yglesias would say, “That’s something.”
And indeed, it is “something“, isn’t it? All of the “somethings” I can come up with, though, entail pointing out that all three — Paulson, Geithner and Summers — in their roles as top U.S. economic officials over the last two decades had a direct hand in fomenting the current, ongoing global financial catastrophe. That and a string of profanities.