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We need a drastic, radical simplification of the financial system. That means breaking up large institutions that are too big to fail, and breaking the rice bowl of ones that add nothing to broad economic welfare and efficiency other than an opportunity for the own enrichment at the general expense. To get there politically, we first need to expose the full extent of the fraud, and we need a Democratic Party that reverts to its New Deal role as the party of regular people rather than its Clintonian role as a second party of Wall Street.
Charming as it was to see former President Clinton admit that mistakes were made on his watch when it came to de-regulation of derivatives, that is only the beginning of redemption. Clinton's people did not take dive on this and on kindred issues because they made technical errors, but because the whole administration was in bed with Wall Street.
Happily, the politics of this epic struggle are starting to move in a more progressive direction. Senator Blanche Lincoln, chair of the Senate Agricultural Committee (which shares jurisdiction over derivatives regulation) is now taking a tougher line on regulation. It doesn't hurt that she faces a tough re-election as well as primary opposition from the left.
After the great collapse, the smart politics as well as the right thing to do is to root out the fraud that is the essence of Wall Street's business model--and dare the Republicans to oppose it. The deeper problem is not the Republicans but the fact that much of the Democratic Party is not sure that it wants to drastically simplify the financial system. President Obama has lately been finding his voice as a progressive. Let's see if he truly rises to the occasion.
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http://www.huffingtonpost.com/robert-kuttner/fraud-at-last_b_542163.html.
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