1.21.2010

With a plate already full

...Obama has lined up his next windmill: the banks.
"Never again will the American taxpayer be held hostage by banks that are too big to fail," Mr Obama said.

The plans - the most far-reaching yet -include limits to the size of banks and restrictions on riskier trading.
Allowing the government to regulate the size of private banks is just as much a threat to our basic freedoms as government regulation of the health care industry. Simply because the populists on both sides are burning bankers in effigy, it doesn't make the policy right.

I do support devestment from banks that are now "too big to fail," and, oddly, it lines me up with a liberal evangelical:
When I recently told a few friends that my wife, Joy, and I had decided to close our little account at Bank of America and move our money to a local bank that has behaved more responsibly, I was amazed at the response. Religious leaders and pastors from around the country called to say that they, too, were ready to take their money out of the big banks that have shown such shameful morality and instead invest according to their values, by putting money into more local and community-based institutions.
There is much in Wallis's article I disagree with -- especially the idea that banks tricked people into their loans. People made gambles, and frankly, if they didn't read the rules, they shouldn't have played the game. It's too late to cry that your gamble didn't pay off -- that's the nature of gambling. Nor do I have a problem with bank bonuses. But in this solution of Wallis's, we find an ultimately libertarian solution to the problem of banks that are far, far too big -- and in that respect, in the sense that Wallis urges some sense of personal responsibility and autonomy, I agree with him.

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But to return to Obama. What does this new move of his suggest?

I would say it is a wise move, politically -- it does two very closely related things for him. Firstly, if he does this carefully enough, he can position the argument such that it appeals to populists on both sides of the aisle who are clamoring for banker blood. If Obama can bring in enough Republican populists to pass these restrictions (it's a long shot, but not impossible), he can claim a truly bipartisan victory. Positioning himself as a populist could be a good move for him right now.

A populist, bipartisan victory by Obama while Scott Brown gets seated would give Obama not only political momentum and capital, but also a new way to either frame the debate on health care, or let the debate die. This banking trick would be a major reform along the lines of what the populist left is looking for. They might then push for a more maximalist policy on health care reform, but they might accept the victory in lieu of a victory there.

It's a gamble for Obama, and with so much on his plate already, reforming the banking system will be that much more difficult. But if he frames it right, and gets it through quickly, it could be a deeply reinvigorating victory for the Dems.