Obama refuses bipartisan compromise on finance regulatory bill

Susan Ferrichio:

Just a few weeks ago, Republican and Democratic Senators had high hopes that financial regulatory reform would finally provide an opportunity for bipartisan agreement on major legislation. But Republicans left a White House meeting accusing President Obama of trying to jam through a liberal bill.

Wednesday's White House meeting was supposed to bring the two parties together on the issue, but it seemed to do the opposite. Republicans are now gearing up to block a solely Democratic initiative that would increase the regulation of banks and capital markets and give the federal government the power and a $50 billion fund to liquidate large financial institutions on the verge of collapse.

House Minority Leader John Boehner, who attended the meeting, said the Democratic proposal "sets up a fund for permanent bailouts that guarantees taxpayers are going to have to keep subsidizing irresponsible behavior on Wall Street, and lets the federal government pick winners and losers in the private sector."

Senate Minority Leader Mitch McConnell, R-Ky., predicted overwhelming Republican opposition to the bill. He left the meeting convinced that the White House got too involved in the earlier negotiations and nixed compromise language the two parties had been working on last month.

"The Democrats were pulled back from the White House, and the impression one would get from that is that they thought this was a great political issue for them and they wanted to try to jam it," McConnell said.

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"Every time there was an agreement, a trip to the White House is made and then they come back and say 'No, no, no,' " said Sen. Scott Brown, R-Mass.

Republicans argue that Obama wanted to produce the most liberal bill possible, while Democrats insisted the GOP was simply unwilling to compromise.

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Michael Barone also looks at the administrations thuggish behavior with the banks who also tried to get some compromise on the bill.

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The meeting included top bank CEOs, including Lloyd Blankfein of Goldman Sachs, Jamie Dimon of JPMorgan Chase and Brian Moynihan of Bank of America. Wielding the muscle were longtime political consultant David Axelrod and the distinguished economist Larry Summers. Bloomberg has the story:

During one exchange, executives raised concern over the administration’s criticism of the industry’s efforts to influence the bill, according to one participant. Summers responded by calling on the industry to cease running ads against the bill and to stop its lobbyists from trying to insert loopholes in the legislation, the person said.

In other words, abandon your First Amendment right to petition the government for a redress of grievances. Or to put it in Chicago language, Nice little bank ya got there. Wouldn’t want anything to happen to it . . . .

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This explains why Obama is having such a difficult time governing. He does not believe in the art of compromise and tries to bludgeon any opposition to his liberal agenda. He put a lose like Dodd who was one of the figures responsible for the financial mess to begin with in charge of the bill. This is the same Dood who opposed regulation of Fannie and Freddie which would have halted their march toward the debacle that turned a housing crisis into a banking crisis.

The Republicans can win on this issue. They must not let themselves get on the defensive about their opposition to this bill. They need to attack Dood and Barney Franks role in creating the financial crisis.

They also need to point out that this bill apparently does nothing to address the real problem that led to this crisis. The lending decision was separated from the risk decision. The people who were approving the loans had nothing to lose if the loan went bad and had a financial incentive to make bad loans.

Prior to 1997, lenders had to make sure they had someone who could pay back the loans. With the monetizing of home loans in packages that were sliced and diced into various tranches that no longer happened. Real Estate brokers who were selling the houses were sometimes making the loan decisions. The monetizing was further exacerbated by Fannie and Freddie automatically buying all the paper regardless of quality.