Here's Jeff Jacoby with "The blame for the bloated economy":
Deregulators run amok undoubtedly make a flamboyant culprit. But do they exist? Should we really take seriously the claim that the past eight years have been characterized by letting "the market run wild"?
Granted, there is significant recent legislation that eased financial restrictions. Most often mentioned is the Gramm-Leach-Bliley Act, which, as The New York Times described it on Monday, "removed barriers between commercial and investment banks that had been instituted to reduce the risk of economic catastrophes." Some argue that the law, which allowed traditional banks and investment firms to be affiliated under one holding company, helped bring on the credit meltdown. Even if true, how was that George W. Bush's fault? The law was signed by President Bill Clinton in 1999, after being passed by lopsided majorities in both houses of Congress.
Gramm-Leach-Bliley's lead sponsors were Republicans, but the 34 Democratic senators who voted for the bill surely weren't scheming to "let the market run wild." Ditto the 151 Democrats - among them future Speaker Nancy Pelosi - who voted for the measure in the House. Then-Treasury Secretary (and current Obama adviser) Larry Summers didn't denounce the bill as "laissez-faire jungle capitalism" - he praised it for "promoting financial innovation, lower capital costs, and greater international competitiveness." Clinton himself defends the law to this day.
1 comment:
Trying to blame or exculpate either party is a waste of time and distracts from the quest for workable solutions.
Our entire government has let us down. The answer isn't deregulation, nor is it regulation. The answer is the smart, thoughtful application of both concepts.
The 'complex financial instruments' that no one understands yet were being employed to enable the ridiculous practice of loaning money to people with no means of paying it back of course needed to be regulated. No one did anything because a) they were being paid off by lobbyists representing investment interests, or b) they were engaging in the demagoguery of of providing 'affordable loans'.
The need for regulation manifests itself when the bankers show up demanding their bailout and we end up handing them untold billions of dollars because allowing them to face the ramifications of their untenable business practices will supposedly destroy our economy. The most recent handout was endorsed by both political parties and has fiscally crippled our government.
On the other hand, overregulation stifles innovation and prevents growth.
So where do we turn? Who in our government has the fortitude to make the tough decisions and stand up to the pressure by lobbyists from industry and labor groups? It's a short list.
Post a Comment