Yesterday The Senate, by a 60-39 vote, passed bill to regulate at least some of the cavalier tactics used by Wall Street, the mortgage industry and the credit card oligopolies. This legislation will likely be signed by President Obama next week.
While its clear a great deal of this is tantamount to fixing the lock on the barn door after the horse has escaped the corral, it is also clear that nothing can be done until we replace the mind-set that big shareholders and hedge fund sharpies can police themselves. Even three Senators in the Republican Party agree with these measures. There will now be a nw Consumer Financial Protection Bureau, regulation of the Derivatives Markets, and a requirement that all investment agencies over 150 million face sharper regulation and more transparency and a greater institutional stake in their investments. Securitization, the process through which bad mortgage loans could be bundled up to spread throughout the economic system will be tough to cover. Best of all, this may herald the end of taxpayer bailouts of major investment banks.
Were these new regulations likely watered down by financial lobbyists? Will new financial chicanery arise, possibly methods difficult to detect and enforce in all cases? Too late for millions of Americans to fully recover from the effects Wall Street and the sub-prime mortgage panderers already set up? The answer to all these questions has to be yes.
But in a democratic society you cannot make the good the enemy of the perfect. And we are not the first generation to face tough times. Not everyone has received the message yet--that a just society cannot exist with only rules for individuals but car-te blanche for corporations.
But as the economy recovers, and I believe it will albeit very slowly, this point will be remembered I believe as the beginning of the end of the Era of "Irrational Exuberance" (Former Fed Chairman Alan Greenspan's phrase) and a return to greater accountability. We may not be going forward fast, but with the passage of this bill by an overwhelming margin, we are not going to down the same road again anytime soon.