Michael Barone writes up what the GOP should be thinking of in the upcoming debate over banking reform:
The big media tends to portray Republicans as opposed to all financial regulation. But every intelligent person knows that some form of financial regulation is necessary. And the 2008 financial collapse shows we need smarter regulation that will discourage, not encourage, government bailouts of Wall Street.
Republicans have good policy and political reasons to argue not for weaker regulation but for tougher regulation of Wall Street firms. They should oppose resolution authority that helps the big firms and, while they’re at it, seek to increase the capital requirements on such firms that are left vague in the Dodd bill. Democrats have taken the side of Wall Street. Republicans should stand up for Main Street — and taxpayers — instead.
It is a myth – but a durable one – that the GOP is the party of big business and/or bankers. It used to be so, but mostly since Goldwater and definitely since Reagan, big business types really haven’t found a home in the GOP – but they have found a home in the Democrat party.
There are two reasons for this: one, the leaders of big business tend to be educated at the same elite universities as the leaders of liberalism; they are steeped in the same worldview as the left. Two, the leaders of big business prefer to cut deals with big government rather than, say, make the best product or do a good overall job.
But the debate over banking reform will bring out the class war rhetoric from the Democrats – we GOPers will be cast as defenders of big business by Democrats who are raking in donations from same. The proposed reforms of the Democrats will thus be long on anti-business rhetoric, short on anything which might actually make big business more responsive to the needs of the American people.
And there in lies our big chance to break out of the liberal parameters of the debate. We can craft a reform message which attacks the actual problems – which actually will force big business to work for the benefit of America, rather than for the benefit of the corporate bosses and their kept politicians in the Democrat party.
Lots of things can be done, but I think the key element of a conservative reform of banking – or a conservative reform of any big business activity – is to enforce the notion that if you’re going to make piles of money, you’d better do so by creating something useful. Banking is vital in a modern, free market economy – it is the necessary mechanism for distributing capital around the economy. Our job is to ensure that this capital is directed towards wealth-creation, rather than merely piling up cash and awarding big bonuses to a select few.
It is an absurdity, for instance, that we would allow an investment firm to cook up screwball things like credit default swaps. Its nice for bankers because they can make money if an investment works, or goes south – but it doesn’t actually do anything to create wealth…and thus it doesn’t do anything to create jobs. Conservative reform would be to put an end to such scams (which have played such a huge role in our current economic crisis) and encourage wiser use of money.
This sort of reform would allow us to war on the bankers who have made such a hash of things while preventing us from falling in to a Statist model which would merely substitute government for corporate idiots in the mismanagement of capital. It would also, of course, put us on the side of the people – not “the people” in Democrat terms, which is just a mythical prop in a leftist morality play, but the real people – the people who do the work of this nation and who will astound the world if just given the chance to create wealth unfettered.
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