The Financial Regulatory Overhaul Is Dead

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The only policy issue anyone in Washington is talking about these days is health care.

Once in a while, Afghanistan comes up, or even global warming. But the talk of “Fixing Wall Street” is fading far into the background.

I won’t say no financial reform will become law this year, but whatever does move will be more nibbling around the edges than any sweeping overhaul.

Yes, President Obama has a penchant for juggling many balls at once, and yes, the Senate Banking and House Financial Services Committees can make these issues a priority, but compare the mood today to the mood in 2002, after Enron and WorldCom. Back then, all the buzz on Capitol Hill was about Wall Street. By now, the Wall Street wind is out of the Washington sails.

Buzz and headlines are the most powerful drivers of legislation on Capitol Hill. Lobbyists are in a distant second place. Firms in all corners of the financial sector are lobbying up, and there are some gains the most influential firms can win, but we’re talking obscure tweaks more than ambitious reforms.  We’ll get a modest financial reform, probably next year, maybe this year.

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