In a victory for the hordes of Washington politicians who have been deeply committed to doing something about Wall Street (regardless of whether that something was likely to be effective), the Senate voted 60 to 38 to move forward with a significant overhaul of the nation’s financial regulations. Three of those votes came from moderate Republicans, including Cosmo-pinup Scott Brown, who, after demanding that Democrats remove a tax on banks (and replace the revenue with TARP revenue that was intended to be used to reduce the deficit), gave the bill his blessing. As predicted, once Brown came around, fellow GOP squishes centrists Olympia Snowe and Susan Collins followed. No longer just a guy with a truck, he’s now a guy with a truck who decides whether or not to massively increase the power of federal regulators over the nation’s banking system.
Which is to say that if you actually wanted to take substantive steps to address the roots of the recent economic crisis, well, you’re probably out of luck. As Cato’s Mark Calabria argues, the bill takes the Alfred E. Neuman approach to the root causes of the financial meltdown:
In choosing to ignore the actual causes of the financial crisis—loose monetary policy, Fannie/Freddie, and never-ending efforts to expand homeownership—and instead further expanding government guarantees behind financial risk-taking, Congress is eliminating whatever market discipline might have been left in the banking industry. But we shouldn’t be surprised, since this administration and Congress have consistently chosen to ignore the real problems facing our country—unemployment, perverse government incentives for risk-taking, massive fiscal imbalances—and instead pursued an agenda of rewarding special interests and expanding government.
Here’s Reason.tv with “Three Reasons the New Financial Regs Won’t Fix Anything”: