Photo: The White House
Thursday should be a very interesting day in the debate over financial reform, as Barack Obama heads to the Cooper Union Institute to deliver what will be a very closely followed speech on financial reform.Coming as it does on the heels of SEC vs. Goldman Sachs (GS), and at a very late-stage in the game (we’re well past the point of vague generalities), this speech should give a clear indication of the type of bill Obama wants to sign.
Will a hard Volcker rule be in place? Will Blanche Lincoln’s anti-derivative rule make it into the final bill?
We’ll know shortly.
Meanwhile, Mike O’Rourke picks up another interesting, but important tension: that being the growing rift between New York City pols (like Bloomberg) who recognised the need to not kill the Wall Street golden goose.
It will be interesting to see the environment and how the speech is received. Today, the NY State Comptroller Thomas Dinapoli put out a press release titled, “DiNapoli: State Could Run Short of Cash, Releases Final Closing Numbers for Last State Fiscal Year, Warns of Cash Crunch.” The only reason the state finished the 2009-2010 fiscal year with a positive balance was it postponed payments into the new fiscal year. The release notes “The state Division of the Budget projects the General Fund will end the months of May, June, July and August with a negative balance. This is unprecedented in New York’s history, indicating growing fiscal stress and historically low cash flow levels.” The Comptroller’s annual data was the primary spark for the Wall Street bonus outrage over the past 18 months. Politicians throughout the country, including many high profile ones in New York, used the data to take a populist approach and bash Wall Street for political gain.
New York City is hardly an enclave of conservatism, but in recent weeks and months, the tone of the main stream print media has shifted in favour of Wall Street (or at least the taxes it pays) and in opposition to Washington. The charge has been led by Mayor Bloomberg who recognises the importance of the Financial industry’s tax revenues to the livelihood of the city and the state. Local media has also turned on Senator Schumer who is being portrayed as trading Wall Street (and thus New York) in favour of landing Harry Reid’s post as Majority Leader if (when) Reid is voted out of office in November. Currently, the state could not have a weaker Governor, and his likely successor has been among the most aggressive Wall Street bashers, leaving Bloomberg as the only high profile politician in the industry’s corner. Now, the President heads to New York to spread his message the day after the state comptroller warns of the state’s precarious financial state due to reduced tax revenues. With an election approximately 6 months away, today’s news should be a wake-up call to all New York politicians to follow Bloomberg’s lead. If they don’t start to battle for their continuants, then soon they won’t have any.
Napoli’s message, which did not get much attention today, was indeed quite stark.
“The state is starting the new fiscal year the way we ended the old one,” DiNapoli said. “The state’s finances are very shaky. Big bills are piling up, and there may not be enough cash to cover them. We need the Governor and the Legislature to agree on a realistic budget that aligns revenue with spending and isn’t a replay of last year’s buy-time budget. Without a responsible spending plan, our cash shortfalls may be much worse than last year.”
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