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The Place Where Reform Goes to Die

Posted By Barry Ritholtz On December 29, 2009 @ 5:21 pm In Bailouts,Politics,Regulation | Comments Disabled

One of the best things I have ever read on Huff Po –  The Cash Committee: How Wall Street Wins On The Hill [1] — explains how Wall Street manages to win in Congress, no matter who is the controlling party.

The Banking committee has become the place where reform goes to die.

“In the fall of 2008, Democrats took the White House and expanded their Congressional majorities as America struggled through a financial collapse wrought by years of deregulation. The public was furious. It seemed as if the banks and institutions that dragged the economy to the brink of disaster — and were subsequently rescued by taxpayer funds — would finally be forced to change their ways.

But it’s not happening. Financial regulation’s long slog through Congress has left it riddled with loopholes, carved out at the request of the same industries that caused the mess in the first place. An outraged American public is proving no match for the mix of corporate money and influence that has been marshaled on behalf of the financial sector.”

Yes another tactical error [2] by the Dems:

In short, by setting up the committee as a place for shaky Democrats from red districts to pad their campaign coffers, leadership made a choice to prioritize fundraising over the passage of strong legislation. “It makes it difficult to corral consensus,” says Rep. Stephen Lynch (D-Mass.), a subcommittee chairman, of the unwieldy panel.

And just as the lure of money leads inexperienced new members to join the committee, it prompts experienced staffers to bolt for larger paydays in the private sector. “You have this phenomenon where if you have a staffer who’s very experienced on a certain issue and is dealing with the financial sector for any number of months or years, all of a sudden they become a real acquisition target for Wall Street,” says Lynch.

The key takeaway: Both parties are beholden to corporate interests.

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Previously:
Tactical Error: Health Care vs Finance Regulatory Reform [2] (September 9th, 2009)

http://www.ritholtz.com/blog/2009/09/finance-reform-vs-health-care-reform/

Source:
The Cash Committee: How Wall Street Wins On The Hill [1]
Laura Bassett, Jeff Muskus and Elyse Siegel
Huff Po, December 29 , 2009

http://www.huffingtonpost.com/2009/12/29/the-cash-committee-how-wa_n_402373.html


Article printed from The Big Picture: http://www.ritholtz.com/blog

URL to article: http://www.ritholtz.com/blog/2009/12/the-place-where-reform-goes-to-die/

URLs in this post:

[1] The Cash Committee: How Wall Street Wins On The Hill: http://www.huffingtonpost.com/2009/12/29/the-cash-committee-how-wa_n_402373.html

[2] tactical error: http://www.ritholtz.com/blog/2009/09/finance-reform-vs-health-care-reform/

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