Good news! A Republican helped move a crucial component of financial regulatory reform through a procedural hurdle today, which marks the first time a Republican has helped a Democrat since, oh, the Civil War. But there's bad news too, right?
Chuck Grassley, the meanest ol' Iowan to ever tweet, is a notorious Republican 'wad. So it was a big surprise that he did this tiny, irrelevant favor to Blanche Lincoln (D-LA) and voted "yea" on her derivatives regulation package, moving it from out of the Senate agriculture committee to the floor. (Why was it in the agriculture committee? Who the hell knows? I mean: Why do we have a Senate at all, frankly?)
And this is on top of another miracle: Lincoln's derivatives measure totally doesn't suck! It is not "perfect," where "perfect" would be "round up every single Wharton MBA in Manhattan and force them onto some kind of rocket destined for deep space," but if passed in its current form it would ban banks from derivatives trading altogether (derivatives are sneaky ways for traders to bet on the direction of the stock market and other commodities). That is pretty harsh, and much better than everyone expected from Blanche, who is a "Blue Dog" Democrat, which is fancy Washington D.C. slang for "utterly useless."
So, taken all together this, should make young internet-using Communists/Kenyan citizens like us extremely optimistic right? Well.
The thing is, strong language on derivatives isn't the only component of effective financial regulatory reform. Derivatives didn't cause the crash, they just exacerbated it; and any bill that's worth calling "reform" will need to address the other factors: deregulation, rising leverage, compromised ratings agencies, and fraudulent mortgages, to name a few.
But that's still only part of it. During the 2000s, as Simon Johnson pointed out earlier this month, Wall Street accounted for 41 percent of U.S. corporate profits. That's immense, and, we learned, ultimately quite dangerous for the economy. So how do we fix that? We regulate, strongly. But regulating Wall Street likely means lowering its profits. And because Wall Street profits make up such a large part of corporate profits, we're talking reducing the amount of money America makes, period.
And no politician is going to do that.