Jonathan Chait

The Next Big Reform

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The politics of financial reform are pretty unusual. You've got a potential policy change that would adversely impact the biggest, most profitable companies in America. This is normally a recipe for inaction or, at best, symbolic reform. But the outlook actually looks quite promising. As Noam Scheiber points out in his latest excellent piece, Republicans are justifiably afraid to be seen as carrying water for Wall Street:

Mostly, he just encouraged them to press ahead, emphasizing the win-win dynamic at work. If Republicans dig in, the president argued, that’s a fight he’d welcome. (Administration officials have seen polling suggesting the public will assume Republicans are carrying Wall Street’s water, regardless of their arguments.) And if Republicans want to join in the effort to rein in Wall Streetwell, no one at the White House would turn down a big, bipartisan victory. ...

Since health care, says the official, “Democrats are seeing the value in holding together,” and so the banks are scrambling to produce a far-inferior plan B: holding the line with all 41 Senate Republicans. The problem, of course, is that a reform counteroffensive composed entirely of Republicans looks suspiciously like the party is doing Wall Street’s biddingprecisely what the banks and the GOP want to avoid.

The administration is really in a position of strength here, unlike climate change or other issues where Republicans have no fear of tying themselves to business. Either Democrats get a good bill or a great campaign issue. A good bill, of course, helps incumbents in both parties, which is why that seems like the more probable outcome.

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