Financial Reform

Let your mind go back in time to September 2008.

Remember? That was when the economic collapse really began. People's 401ks were losing value at a dizzying pace. The economy was bleeding jobs. That was when the whole system seemed to be imploding around us.

The desire for financial regulation probably hasn't been higher in my life than it was then.

"[H]ere's the situation," writes Paul Krugman in the New York Times. "We've been through the second–worst financial crisis in the history of the world, and we've barely begun to recover: 29 million Americans either can't find jobs or can't find full–time work."

But, Krugman laments, the drive to reform the system is sputtering to the extent that, if the choice is between a watered–down version of the modestly effective House bill or no bill at all, "the second option is starting to look preferable."

Krugman is an award–winning economist. But his observation about the nature of legislative procedure indicates how legislation can be strangled in the Senate by its procedure. Forget what the legislation may be designed to achieve or the issues that are behind it. When the members of the minority party stand together against something, as the Republicans have often done in the last year, the members of the majority party must stand together or the legislation will die.

Democrats aren't good at that loyalty thing. Never have been. That's why Will Rogers used to say he didn't belong to an organized party; he was a Democrat. That't a pretty good line, and pretty good lines have the virtue of almost always being true.

Financial reform may be one of those things that Barack Obama can't turn into a bipartisan effort. It should be because it is clearly the responsible thing to do. But if the Republicans can't be appeased, if it is impossible to negotiate with them on this, the Democrats must go ahead and do the right thing, anyway, regardless of the political risks.

I agree with Krugman when he warns against watering down the legislation in the name of bipartisanship.

"There are times when even a highly imperfect reform is much better than nothing; this is very much the case for health care," Krugman writes. "But financial reform is different. An imperfect health care bill can be revised in the light of experience, and if Democrats pass the current plan there will be steady pressure to make it better. A weak financial reform, by contrast, wouldn't be tested until the next big crisis. All it would do is create a false sense of security and a fig leaf for politicians opposed to any serious action — then fail in the clinch."

I don't know about you, but I've had enough of seeing what comes from a false sense of security.