Hi Ho Hobbyhorse, Away!

From a top Obama advisor and 29 other experts, a list of ways to fix what ain't broke.

The plan—which recommends limiting the size of banks, setting guidelines for executive pay and regulating hedge funds—offers the first hint of the kind of changes to the financial system President-elect Barack Obama might push for in the coming weeks and months.

This is basically the same thing that happened after 9/11: Experts in a variety of fields relabeling initiatives they have been pushing all along as a vital part of the response to a disaster.

It's extremely difficult to make the case that executive pay (at non-GSEs, anyway) was the cause of the economic meltdown, or even a major contributing factor. Likewise with unregulated hedge funds and private equity. You could try to construct a tale where limiting the size of banks might have helped, but (as I argued in the print magazine last month), big multi-function banks buying up smaller, crashing banks also probably helped avert an even worse crash, so there are arguments on both sides.

Some of the proposed reforms are probably good ideas—the lead author on the report is Paul Volcker, the former chairman of the Federal Reserve during the Carter and Reagan administrations who will serve as a special Obama White House adviser, and who is a very smart dude (read all about our love for him in last month's print issue as well)—but when a big proposal for reform/spending/restructuring come up, everyone jumps on their hobbyhorses and starts trying to claim things that they've been wanting to do all along are very particularly vital to this project.

This bit's a good idea, for instance:

The proposal suggests that the U.S. government should clarify the status of mortgage giants Fannie Mae and Freddie Mac, either making them into government agencies or regulating them as independent mortgage brokers.