It was not long ago, Sen. Blanche Lincoln (D-AR) was one of the top targets of liberal movements seeking to remove conservative Democrats from office. Her slowing of the health care reform had groups like Move On campaigning for her primary opponent in the fall mid-terms.
They may have to rethink their position now.
Sen. Lincoln has introduced a bill, called the Wall Street Transparency and Accountability Act, that is expected to be folded into the Bill introduced by Sen. Chris Dodd (D-CT). Lincoln's bill finally addresses the root cause of the financial collapse that has crippled our nation, the secret shadow world of derivative trading. The bill requires these transactions to be conducted in plain sight where the public, investors, and regulators can see what is going on.
It also prohibits future federal money from being used to bail out financial institutions. This should eliminate the Republican talking point of the endless taxpayer bailout that those like Mitch McConnell (R-KY) have been shouting from every podium, even though Sen. Dodd's bill had a provision for a fund to be funded by the largest financial institution as a safeguard against the need for future taxpayer bailouts. We saw during the health care reform debate that it doesn't have to be true or in the legislation for those on the edge of the right to shout it in front of any group that will listen, especially if they have cameras.
Let's be clear here. Even combined, the newly created reform bill still misses a couple of key points. There is still no attempt to break up the institutions that have been deemed in the past as too big to fail. That is, banks that do commercial banking, investment banking and other exotic trading that makes them a huge potential liability to regular customers. Ideally, these branches would be separated, each operating as an individual entity, limiting the liability of main street customers and standard investments.
The bill also does not tighten the asset requirements that would prevent these gamblers from placing bets with assets they don't have, speculating that the next bet will cover any losses this bet may incur. This process of fractional reserve banking, along with the secrecy of the derivatives market, was the major reason the sector nearly failed.
For Sen. Lincoln, she may have found the fountain of political youth in bringing this bill forward, and it may indeed extend her political career past the upcoming primary. But will it have an impact on her financing from the same industry she is seeking to regulate? Capitalists who have found a loophole to tap wealth without risk usually aren't happy when an elected official seeks to regulate that process, and they might be hesitant to support such a candidate.
If this move does ultimately shorten her political career, at least she can go out knowing she took a stand and brought forward legislation that will actually benefit the American people. We could use a few more moves like this on Capitol Hill.
Comments