A Step Toward Financial Reform

The 9/15 disaster, as I call the Wall Street meltdown of September 15, 2008, calls for a new wave of financial regulation to replace the laissez-faire (pronounced "lazy fare!") policies of the past thirty years. In the Senate, Connecticut Democrat Christopher Dodd has unveiled a financial regulation bill that would, among other things, consolidate banking supervision under a single agency, regulate privately traded derivatives, limit the Federal Reserve's ability to end money in emergencies to healthy banks at the expense of weaker ones, and create an agency to dismantle financial firms that pose a threat to the well-being of the greater economy.

Naturally, Republicans and the financial industry are none too pleased with Dodd's ideas. But unlike the health care debate, where Democrats aligned with President Obama have to deal with a variety of skeptics, the efforts of Chris Dodd in the Senate (and Barney Frank, Democrat of Massachusetts, in the House) should receive broad support, if only because their objective is to prevent another 9/15 and make sure that federal bailouts of banks, financial firms, and insurance companies never have to be undertaken again. This is what Senator Bob Corker, a Tennessee Republican known for his opposition to bailouts, is willing to meet Dodd halfway.

Dodd and Frank have a long way to go before the Depression-era banking regulations that were jettisoned in the 1980s are fully restored, but this is a step in the right direction.