The Few: Sensible Republican Senators On Financial Reform

Simon Johnson:

Based on what we have seen so far, Senator McConnell proposes to do nothing regarding the systemic risks posed by today’s megabanks and just “let ‘em fail” when necessary.  This is a dangerous and irresponsible position, and it should be opposed tooth-and-nail by anyone who actually cares whether or not we run ourselves into a Second Great Depression.

The second group has remained silent so far, waiting to see which way popular opinion and their leadership will go.  Most likely, almost all will cast their lot in with Senator McConnell. 

And if Senator McConnell brings 40 Senators with him, they will defeat the Dodd bill – and then smash themselves into the rocks of November 2010 as the “too big to fail” party.  Perhaps we should welcome that.

But there is also a third group, not yet numerous, that is more inclined to be sensible or – as Senator Corker aptly put it – to “act like adults.”

These Senators (so far I have a list with precisely three names; tell me if you have more) begin to understand that allowing our megabanks to continue in their current form makes no sense.  The power of this idea is starting to get through (also at BusinessWeek).

Saying we should do nothing about these megabanks makes no sense.  And trying to turn the argument on its head to claim that, “a greater number of smaller banks would pose an even bigger risk of taxpayer bailouts” is truly not a powerful idea.

 

Posted via email from Jim Nichols