The Treasury department’s elaborate plan to restructure the regulation of the nation’s financial markets has the same chance of becoming reality as any other major Bush administration initiative during the next nine months — none.
Even if the president weren’t really an after-thought in the political scheme of things, the congressional, industry and consumer fiefdoms embedded in the current system would not permit such wholesale turf encroachment without a protracted battle.
Just proposing to neuter the Securities and Exchange Commission alone already has set up a howl of protest that would make old Joe Kennedy, its first commissioner and the architect of many of its most lasting rules, proud. When Franklin Roosevelt gave him the job of protecting American investors from the excesses and frauds of Wall Street, those who said the already notorious Bostonian had been one of the worst of the manipulators greeted the appointment with outrage.
The press lord Roy W. Howard, tipped of Roosevelt’s intentions, called Kennedy and demanded in blunt unprintable terms that he not accept the job lest he cause public faith in the markets to decline even further. Kennedy replied in blunt, unprintable terms that if the job were offered, he would take it.
Howard wrote a “fox guarding the hen house” front-page editorial for his 25 or so big city newspapers and FDR responded by announcing that was exactly why he had picked Kennedy. If anyone knew how to write regulations that covered nearly every contingency, it was Kennedy, Roosevelt said. He was right.
It would be foolish here to presume to discuss the ins and outs, rights or wrongs of the Treasury’s proposed blueprint, a task that in the next months will be undertaken probably ad nauseam by accomplished financial and economic minds. That is, other than to merely ask the question about how one regulates greed, which, of course, is at the bottom of the present crisis. With his spectacularly keen business acumen, Kennedy probably would understand how to at least offset the temptation to get rich quick by unsound practices.
But it is possible for the economically unwashed to assess the political opportunities for the monumental task the Treasury now proposes, even in the current atmosphere of near panic over the death of the sub-prime mortgage business, soaring foreclosures and threatened collapses of financial houses.
Anyone who has watched Congress operate understands that nothing of this import under normal situations gets done in a hurry and, once again, turf considerations hamstring progress at every step.
Even considering that these aren’t normal times — given the ruinous impact on a segment of the real estate market and the portending advent of a major recession — a combination of White House impotence and election-year uncertainty make the prospects of major reform under any circumstance utterly improbable.
With the certainty of a new president in only a few months, nothing George Bush can say or do really matters much, barring a crisis of almost apocalyptic proportions. The Democrats control both houses of the national legislature and while their majorities may not be overwhelming, they are enough to assure that no Bush initiative becomes reality.
As far as the next White House occupant goes, neither Democratic nomination seekers Sens. Barack Obama nor Hillary Clinton could be expected to pick up the cudgel for the Treasury proposal. Even if the next president is Republican John McCain, much of the ambitious overhaul of the system would not be viable. He has said that he does not believe in government interference in private markets, leading to charges that he is a reincarnation of Herbert Hoover, a not really fair analogy for either man.
So with such dim political prospects, the Treasury effort is aimed more at assuring Americans that, while their tenure in office is short, those in charge are still on the job giving it their best.
More than one critic condemned the 200-page blueprint as a pipedream that completely ignores the political landscape. The nation is not, despite the hysteria, even close to the throes of an economic disaster akin to the one that led to the creation of the SEC, they note.
That is true. But having someone with a mind as practical as old Joe Kennedy’s is highly desirable. Let’s hope the next person up at the White House finds one.
(Dan K. Thomasson is former editor of the Scripps Howard News Service.)