The biggest reform of the way Wall Street does business since the Depression passed the Senate today 60 to 39. The President is expected to sign the bill early next week.
However, with a Bloomberg poll showing that four out of five Americans seeing this reform as ineffective, the president and Washington Democrats are faced with the prospect of mounting another campaign to sell a law to the public after it has been passed. Judging by how well Healthcare Reform “sales pitch” has been received, Democrats may simply let the legislation speak for itself.
According to a poll conducted by Ipsos Public Affairs, 71 percent of Americans either had never heard of the proposals in the legislation or do not know enough about it. While the majority of Americans view Wall Street with suspicion, and may have welcomed the overhaul if it were explained to them, they were never instructed enough on the bill provisions to form an opinion.
There is a lot to hide in the way the bill was crafted. Sponsored by retiring Connecticut Sen. Chris Dodd (D), the legislation passes strict consumer controls on major banks that will standardize derivatives contracts and allow for regulators to break up big conglomerate banks that may pose a threat to the stability of the financial system. Delaware Sen. Ted Kaufman (D) expressed reservations about the vagueness of the law and the amount of power it gives to regulators over the banking industry.
Given the way the The Patient Protection and Affordable Care Act of 2010 was ‘sold’ after it was passed, Washington Democrats saw no need to push for a greater understanding of the finical reform bill’s provisions. It did absolutely no good for them in that case and, in fact, may have solidified impressions that the bill was overreaching and was unnecessary.
Politically, the reform bill has positives and negatives for Democrats. Wall street reform does not directly tackle the problems associated with persistent unemployment and a contracting manufacturing sector, but it does have “Wall Street” in the name. Tackling financial reform will allow Democrats on the campaign trail to indict Bush-era Republicans once again for the 2008 economic meltdown. Bringing out the base is paramount for Democrats going into the midterm elections.
That calculation could be correct, considering that support and opposition of the measure falls roughly along party lines, and is thus viewed as a non-issue for the coming midterm elections. The problem with this view, however, is that there aren’t very many 2008 Republicans up for reelection this cycle.
A new crop of GOP candidates, fueled by Tea Party enthusiasm, will be all too willing to accept criticism of Bush-era conservatives, and turn that argument around on modern Democrats charging that their usual answer to legislative challenges is to centralize and regulate. Republican’s believe that voting against the bill, even with some legislative compromises buried within it, had few political downsides.
Does the financial reform bill require a hard sell? Probably not; there are few upsides for the President and Congressional Democrats, and many potential pitfalls. In the coming weeks, summer will lazily roll into August. The public goes on vacation and Congress goes home. What happens in the interim will drive the political football forward, and most are guessing that it will not be financial regulation. There is more legislating to do before the break. We will see how the ‘no sell’ tactic works when “Cap and Trade” hits the Senate floor before the end of the month.
Noah Rothman is the online editor at C&E. Email him at firstname.lastname@example.org
Sen. Dodd admits on the floor of the Senate yesterday says that the financial reform bill is “not a perfect bill” and “It will take the next economic crisis, as certainly it will come, to determine whether or not the provisions of this bill will actually provide this generation or the next generation of regulators with the tools necessary to minimize the effects of that crisis when it happens.”
Reassuring from the sponsor of this legislation. He gets points for honesty.