GOP is on hot seat with financial reform
Republicans in the U.S. Senate face a political dilemma this week: Whether to support the efforts of President Barack Obama and Democrats for new regulatory oversight of the nation’s financial system or whether to try to block the effort through filibuster.
The dilemma stems from the fact that — unlike the widespread public opposition to health care reform legislation — recent polls show Americans evenly split on the financial reform. That could mean opposition to the reform will make things more difficult for Republican incumbents come September.
The fact that the tanking of the economy in 2008 was brought on by a banking and insurance crisis no doubt is a significant factor in public views about reform. So, too, is the fact that one of the nation’s largest investment bankers, Goldman Sachs, was charged last week with fraud in a federal lawsuit.
It’s understandable that Republicans are cautious about backing the financial reform measure. It would give extensive new authority to a nine-member commission — including the power to decide which firms are so large and interconnected that they should be broken up to protect the economy.
There would also be authority to regulate derivatives, the investment instruments that helped cause the 2008 bust. Additionally, there would be a new bureau created to protect consumers from deceptive financial practices. And there would be a possibility for more federal financial help to some firms in limited circumstances.
The measure does create broad new powers for federal oversight of the financial sector. But anyone who believes everything was just peachy with the limited oversight leading up to the financial meltdown in 2008 has a very short memory. There is good reason to believe that if the government had not stepped in when it did — during President George W. Bush’s administration, it should be noted — the recession could have been much worse.
New regulations and oversight are needed to prevent a rerun of what led up to the events of two years ago.
We suspect a number of Republicans will recognize this — or at least see the political danger involved in opposing the reform — and will join with Democrats in the Senate to move the reforms forward.