Stephen Foley: Political games on Capitol Hill mean nothing has yet been learnt from this affair
Wednesday 28 April 2010
Republicans don't like being characterised by Barack Obama as the party of "No". Perhaps it is most accurate to describe them as the party of "Not yet". The effect is the same.
If the President believed his successful enacting of healthcare reform would burst the Congressional dam against his agenda, he has been disabused. Democrats on Capitol Hill have been energised, but, two years on from a financial crisis that caused the world's worst recession since the 1930s, Republicans are still able to delay progress on a package of reforms designed to prevent a similar crisis from engulfing us in the future.
For Wall Street, time is money. Goldman Sachs has been bringing in $1m (£650,000) every 10minutes so far this year, but a clampdown on its activities and new rules to limit risk-taking threaten its profits. Any delay is profitable.
It is not as if Republican leaders failed to hear the shouts of joy that erupted when Goldman was charged with fraud this month. Quite the opposite. Amid intensifying anger over the excesses on Wall Street symbolised by Goldman, the party is back at the negotiating table. Yet all 41 Republican senators united on Monday night to oppose a vote that would have allowed debate on a financial reform bill finally to begin.
The outlines of the coming Wall Street shake-up are already clear. There will be new rules to protect consumers, reducing the chance of toxic loans infecting the financial system in future. There will be new restrictions that stop financial firms getting so big they can endanger the system, and a process for winding them down gracefully if they fail. The vast derivatives trading market will no longer be conducted in the shadows, but on public exchanges.
But, within the provisions, the smallest detail can make billions of dollars of a difference to banks' bottom lines, which is why the balance of power between the parties is vitally important to Wall Street. The Goldman fraud charges gave Democrats the advantage, prompting them to push a slew of tough new provisions, including one to force banks to shut down their derivatives-trading wing altogether.
The Republican blocking vote demonstrates that they, too, still have a hand to play – in financial reform negotiations as in other legislative efforts. When the White House said it planned to push for an immigration bill, the Republican Senator Saxby Chambliss replied that there simply isn't the time. Senator Lindsey Graham's walk-out from previously bipartisan talks on a climate change bill means a dramatic delay. With mid-term elections looming that are expected to cut the Democrat majority further, the power of "Not yet" increases with each passing day.
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