The Prospects for Financial Reform
The Guardian opinion site, Comment is free, has posted my latest commentary on financial reform. The good news is that, instead of being watered down along the way, reform efforts are getting stronger:
Democratic Senator Blanche Lincoln of Arkansas, who until recently was considered weak on the subject, passed a tough bill out of her agriculture committee that would impose transparency requirements on the murky world of derivatives trading.And for those with short memories, let us not forget why reform is necessary:
Ted Kaufman of Delaware thinks that banks have simply gotten too big and is pushing a bill to cut them down to size, a proposal that would have seemed outlandish not long ago. With an MBA from Wharton, Kaufman is an unlikely crusader for reining in the financial sector, but he has been pushing for stronger reform in a remarkable series of speeches on the Senate floor.
Wall Street made billions churning the accounts of its clients with fiendishly complicated derivatives that poisoned the entire financial system and crippled the world economy when overheated real estate prices fell. A modern economy requires a modern and complex financial sector, but it's hard to see how these machinations served any social or economic purpose other than to make bundles of money for the firms that sold them.