I rarely comment on American politics but a headline in today's Financial times prompted me to venture into this murky (and largely uninteresting) territory. I remember watching TV as a kid when suddenly a commercial would pop up and a man would say "The following is a party political broadcast." Screams of dismay would ensue and my siblings and I would run to the kitchen for a snack until it was over. It was invariably some party drone refuting what some other party drone said about him or her and went on for what seemed to be hours. That said, it was the only time I had to be exposed to politics unless I went looking.
Today's media, which treats national politicians like rock stars, shoves the stuff down our throats 24/7. Politicians have become stone figures cast in the form of their party's image (read 'spin') and their utterings and policies rarely vary from the PR dogma. One party's depictions of the other party is also mostly unchanging from year to year, century to century. But today when I saw the FT I had a sinking feeling that our politicians were really not paying the slightest bit of attention to the world outside their little bubble. And it now seems that they are once again going to bend to the special interest groups - this time to derail financial markets regulation.
The FT said: "Republicans are opposing a plan to impose tougher capital and liquidity requirements on companies that pose a risk to the financial system." My God, but their memories are short. Investment banks that were leveraged 30 to 1 debt to equity (some were thought to be as high as 60 to 1) nearly brought the country and the world to its financial knees.
Further: "Republicans say they are unconvinced that any regulator can even define systemic risk. They are happy to set up monitoring of possible bubbles but say the whole concept is too vague for an immediate introduction of sweeping powers." At the risk of sounding like John Cleese in Fawlty Towers - Too vague? Too VAGUE?! Was the demise of Lehman Brothers, Bear Stearns, and nearly AIG too vague a concept? Was the worldwide credit crunch and recession and loss of gazillions of jobs too vague to grasp? Call me gobsmacked. And it isn't just me. Former Treasury Secretary Henry Paulson sees it too. He writes in today's New York Times:
"Congress must pass financial regulatory reform. Delays are creating uncertainty, undermining the ability of financial institutions to increase lending to the businesses of all sizes that want to invest and fuel our recovery. Our overriding goal in restructuring our financial architecture should be that taxpayers never again have to save a failing financial institution.
This calls for two vital changes. First, we must create a systemic risk regulator to monitor the stability of the markets and to restrain or end any activity at any financial firm that threatens the broader market. Second, the government must have resolution authority to impose an orderly liquidation on any failing financial institution to minimize its impact on the rest of the system.
Together, these two reforms will enable the regulatory system to better prevent the kinds of excesses that fueled our recent crisis, restore market discipline and keep the failure of a large institution from bringing down the rest of the system."
Thankfully there is a logical voice of reason shouting through the gloom that is our American political system. Henry Paulson was there when it happened. He saw how the system failed him and his colleagues, who had to do the best they could in a terrible situation with a total lack of tools at their disposal.
It is time to tell Congress and the Senate to butt out and listen to the experts. Politicians are not experts in anything apart from party dogma and good hair.
Senator Evan Bayh from Indiana said it best when he quit his job yesterday: "...I do not love Congress.....There is too much partisanship and... too much narrow ideology in Washington, even at a time of enormous national challenge, the people's business is not getting done."