A newly emboldened Obama may yet win on financial services reform
Why some Washingtonians are wrong about the bill's prospects
Conventional wisdom has it that the prospects for financial services reform, already dim, grew dimmer with the passage of health care reform.
The political apocalypse the country witnessed in Washington D.C. around health care issue may have poisoned the well – as David Tittsworth, executive director of the Investment Adviser Association, commented to Investment News in an article published online Monday.
The conventional wisdom misses a basic understanding about the populist president in the White House and the power he’s gained from this health care victory. With health care ticked off the list, a newly emboldened Barack Obama can turn his attention to financial services reform.
Scorched-earth is bad politics
It’s true that the fight might be another nasty one. The Republicans do have the power to block legislation, because the Democrats lack the 60 votes needed to overcome a filibuster. Time is growing short for the Senate bill, which passed out of committee last night to be debated on the Senate floor. The summer/fall campaign season looms. Any bill passed in the Senate must still be reconciled with the one that passed the House last year.
The question is whether Republicans will opt for the scorched-earth route and block a financial services reform package that until recently still had some bipartisan support. Talk about a dangerous political game, one in which the Republicans could easily be painted as the allies of big-money executives on Wall Street. If there’s any group of people in the nation less popular than insurance company executives, it must be fat cats on Wall Street.
Obama was already picking up his paintbrush in his radio address over the weekend, in an oblique reference to J.P. Morgan Chief Jamie Dimon, the executive who came out of the financial crisis as a standard-bearer for the industry.
Unsurprisingly, this proposal (for a consumer agency) has been a source of contention with financial firms who like things just the way they are. In fact, the Republican leader in the House reportedly met with a top executive of one of America’s largest banks and made thwarting reform a key part of his party’s pitch for campaign contributions. And this week, the allies of banks and consumer finance companies launched a multimillion dollar ad campaign to fight against the proposal.
Avoiding the next crisis
On health care, it was easy for Republicans to take a stand against the principle of a government “takeover.” It’s not so easy to face down constituents who lost their houses this year to the mortgage crisis or jobs to the financial meltdown.
“Financial reform is at the top of the agenda because we had a crisis,” points out Kristina Fausti, director of legal and regulatory affairs for Pittsburgh-based Fiduciary360. “There’s a true concern about not letting the economy take another dip.”
Obama is still a neophyte by Washington standards – but when he pulled health care legislation back from the dead, he established himself as a standard-bearer for populism. His natural next step will be Wall Street – and Republicans will take him on at their peril.
Investment Adviser Association
Top Executive: David G. Tittsworth