It’s not often you get to read something and have the sense that you’re reading something of historical importance, but the latest piece from Noam Scheiber in TNR on the politics of financial reform is one such opportunity.
There’s not any particularly big bombshell in there. The basic idea is that the Republicans (lead by Sen. Richard Shelby) are willing to cede more ground on the idea of a Consumer Financial Protection Agency (more power, a head directly appointed by The White House) in exchange for some leeway in other areas, like derivatives or whatnot.
It’s typical Washington stuff that you’d expect in the negotiation of any gigantic bill.
But it’s this type of benign article which 10 (5? 20? 25?) years from now will be re-read and re-read and picked over with a fine-tooth comb when there’s another financial crisis, and the pundits of the day are trying to figure out what the hell happened in Washington that made it all possible.
For example, Wall Street is evidently concerned by the strength of the derivative regulation language in the Dodd Bill and lobbyists hope to have that watered down.
And, yet, when you talk to industry representatives, they don’t appear overly troubled by the recent turn of events. Most continue to regard the derivatives provision in Dodd’s bill as a placeholder, which will almost certainly be nudged aside by a compromise negotiated by Democrat Blanche Lincoln and Republican Saxby Chambliss. (The two senators run the Agriculture Committee, which shares jurisdiction over derivatives.) As one lawyer involved in the derivatives industry told me last week, “If they try to push the Dodd bill as currently written on derivatives—it can’t fly.”
What explains the serene confidence? “Derivatives is the tail on this dog,” the lawyer continued. “It’s not what’s going to drive the bill through Congress. Nor is it the filibuster point. Other stuff makes a lot more noise.” The bottom line, this person concluded, is that voters just aren’t very invested in the details of derivatives reform, and so it’s hard to believe the Democrats will be, too: “Words on the page are not that critical to the public. … The public just wants to see something done here. … To some extent, passing a bill [whatever the details] will be marketed as a success.”
If the next crisis somehow involves derivatives — and really in some way they’ll probably be fingered even if they’re nowhere near the scene of the crime — it’s passages like this one that will stand out in the historical record.
So go read the piece, bookmark it (or email it to yourself) and then when the next crisis unfolds, you can be the first to cite something from it.
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