So just this morning that financial reform thingy got its last Congressional vote before becoming law, and assuming our dear president doesn’t have a last-second case of teh veto lulz, it’ll be officially signed into law sometime next week because why rush things.
We haven’t said much about the bill lately for a number of reasons, such as epic computer failure, knowing the bill would change one thousand times before it was finalized, and utter sloth. Mostly the last one. But now that it’s done, we’re prepared to give a thorough and objective analysis of what the bill contains, doesn’t contain, and what will happen to the financial industry over the next fifty years as a result.
Ha ha, no, just kidding, that’s not what we do at all. Anyway, it’s hard to find honest answers to any of those questions, because the bill itself is around 2,300 pages long (almost as long as the last Stephen King novel), doesn’t have any pictures, and doesn’t follow a three-act narrative. However, I’m told that at least 1,200 of those pages is nothing but ALL WORK AND NO PLAY MAKES BARACK A DULL BOY just to see if he notices before signing it.
We don’t really even know if it’s going to work or not. And that’s not just me saying that, one of the guys who literally wrote the bill said that.
“We won’t know the full results of what we have done until the very institutions we have created, the regulations we have suggested and provided for are actually tested,” Mr. Dodd said in a floor speech. “We can’t legislate wisdom or passion. We can’t legislate competency. All we can do is create the structures and hope that good people will be appointed who will attract other good people — people who will make careers and listen and see to it that never again do we go through what we have gone through.”
It frightens us terribly that the success of Senator Pollyanna’s bill hinges on his hope that good people will be appointed to steer banks.
What do we know about it? That all depends on whom you ask. It either doesn’t go far enough (Russ Feingold) or is the most egregiously overreaching piece of intrusive legislation since the last one (Richard Shelby). It places too much power in the hands of the Fed (Everyone) or is completely and utterly awesome (Ben Bernanke). Overall, the only consensus you’re likely to find is “Meh,” even from the people who authored the stupid thing.
Speaking of the Fed, they’re getting audited one time, which is pretty okay but unless the audit reveals they’re still sitting on a stack of September 2013 Crystal Pepsi futures, I can’t see myself getting terribly excited about it. Mr. Audit-Teh-Fed himself, Ron Paul, isn’t exactly pleased with the result, since it’s a one-time audit instead of an annual sextravaganza. Not that the Fed’s balance sheet ruined the economy, though.
Even Paul Volcker is sort of apathetic about the whole affair, after his so-called Volcker Rule wound up in the final bill more watered-down than an Applebee’s martini. The rule went from banning prop trading outright to limiting it to “only” 3% of each bank’s Tier 1 capital. You think, hey, 3% isn’t all that much, but 3% of $100b is a whole lot. It’s so much that, except for $GS, no one’s going to have to make a single change to their prop trading divisions – and Goldman could just decide they don’t want to be a bank holding company anymore anyway, to avoid the limit. But prop trading didn’t cause this, either.
Given that it seems to do little to address the root weaknesses that allowed the crisis to happen, who, then, actually is happy with the existing bill? Alyx and I are, because it ensures that we’re going to have massive fails to write about for many years to come.