The following is a guest post by Peter Laarman
The very lucid and very calm New York Times financial reporter Binyamin Appelbaum was the featured guest on Fresh Air last night, and this particular show really was a breath of fresh air. The youthful Binyamin explained exactly how the big banks beat back progressive reform in the 2,300-page bill the President just signed into law. The banks and their army of lobbyists made sure that the timid approach of this Goldman-dominated White House—an approach amounting to “keep the current system in place, but add more referees”—was not toughened up by more progressive Congressional Democrats who wanted to force said banks to relinquish their riskier activities or else be broken up into smaller units, none of which would then be too big to fail.
What is more, the new legislation won’t effect any meaningful new regulation until some 200 specific new rules are written, and the banks are likewise determined to win every hand in this inside-the-Beltway-and-below-the-radar rulemaking game. What is still more, it now appears extremely unlikely that Obama will appoint the most obvious and most appropriate choice—Harvard Law professor and Congressional TARP watchdog Elizabeth Warren—to head the new Consumer Financial Protection Agency. White House big dogs Summers and Geithner make no secret of their disdain for Prof. Warren’s fierce advocacy of actual consumer protection, and the banks absolutely abominate her for the obvious reason that she abominates their bad practices.
So what is the practical effect of this and also of the badly-compromised health care reform package, in which the dominant legislative role of the banks was played instead by the big insurers-upon the body politic?
I will tell you. This is a double-effect situation in which both effects are unequivocally negative.
Let me start with the moral effect, because public ethics and civic participation are always my main concerns. The hopes and expectations of the Main Street electorate were betrayed yet again. The very industries that the non-rich consider to be unethical bullies and tormentors—i.e., health insurance companies and big banks—have both prevailed and will certainly continue to plunder and bully at will.
This is not conjecture on my part. Even before the financial regulatory bill passed, the big banks (the ones rescued with taxpayer dollars) were already raising fees and penalties on small depositors and small credit card borrowers and will continue to do so, whereas the big health insurers have already imposed higher premiums and limited access to providers. Thus, the moral effect of the betrayal of Main Street by the Change We Can Believe In crowd will be yet more cynicism and yet more political nonparticipation on the part of the non-rich.
But the practical political effect of its supine surrender to the Permanent Government—to the Economic Royalists, as Franklin Roosevelt called them—for the Obama White House will also be very grim. God is not mocked, and neither are those Main Street voters. When you have a Democratic President and a Democratic Congress who show you that they will do the corporations’ bidding every bit as assiduously as the Republicans do, why not just vote for the real Republicans? And least some of those guys will tell you straight up whose side they are on.