Thursday, January 21, 2010

Speedy Gonzales

It is astonishing that Obama should move so quickly and so transparently in response to the election of Scott Brown in Massachusetts to attack investment banks cum bank/holding companies for blending proprietary trading and more traditional banking functions. Everybody predicted that he would have to kowtow to populists and make this move if the senate supermajority was lost.

The fact is, working through these contradictions in the banking system should have been the focus of his first year in office. It shouldn't have needed to be a knee-jerk reaction to apparent failure on another front. Rahm Emanuel's cynical evocation of Milton Friedman and Naomi Klein's shock doctrine ("never waste a good crisis") took the Democrats off course from where they needed to be.

A careful and considered reevaluation of financial regulation could have been more easily followed with a measured advancement of health care reform, conceivably with less injury to the Democratic agenda as a whole. We may hope that Obama will battle back to fulfill his promise of being a truly awesome and excellent president. Dropping a surprise bomb on Wall St, even if it contains the right explosives, is a little risky.

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