Reform Shorthand: Where's Volcker Standing?

The Wall Street Journal's Take on Wall Street

President Barack Obama proposed new limits on the size and activities of the nation's largest banks, pushing a more muscular approach toward regulation that yanked down bank stocks and raised the stakes in his campaign to show he's tough on Wall Street.

--"New Bank Rules Sink Stocks"; The Wall Street Journal (1/22/2010)

So, government's iron fist is once again coming down (too) hard on private enterprise, imposing (more) bureaucratic red tape on businesses, and hurting job growth and the stock market.

Right?

Umm . . . well . . . not exactly.

If the Journal had asked me to re-write the lead, here's what I would have said instead:

President Obama belatedly announced the first, limited steps to address the root causes of today's economic melt-down: reckless Wall Street banks that have required trillions in taxpayer bailouts to deal with the consequences of their highly leveraged, bad bets -- bets that have caused millions of Americans to lose their jobs, savings and homes.

In other economic news yesterday, Goldman Sachs announced blowout earnings from . . . making more, reckless bets with taxpayers' money.

In my opinion, the only thing worse than 'governing-by-poll' is 'governing-by-Dow-Jones,' i.e., doing whatever makes the stock market go up, and refraining from whatever makes it go down -- at least in the short run.

With the market now down a couple hundred points in the wake of the newly announced bank "reforms," it will be interesting to see if Obama sticks to his guns.

P.S.: want a short-hand way to tell? Figure out how close (or far) Paul Volcker is standing from him (yesterday, he was standing at his side).

"Washington as a Ghost Town" -- Really

Closer to Constituents, Further From Lobbyists

What if Washington Were a Ghost Town?

--Headline, Peggy Noonan Op-Ed piece; The Wall Street Journal (8/1/09)

My thoughts exactly . . . almost 16 years ago.

In fact, that was the thrust of my own 1993(!) Op-Ed piece:

Here's an excerpt:

In an era of jet travel, teleconferencing, and faxes, why not bring Washington to the people? Specifically, let members of Congress work out of their home districts, under their constituents' watchful eye. Such an approach would have several benefits, and surprisingly few drawbacks.

First, it would make members of Congress less accessible to lobbyists and special interests. Lobbying Congress now is like shooting fish in a barrel: All you need is a Washington branch office staffed by a few employees, and a well-heeled political action committee ("PAC") . .

Conversely, locally-based members of Congress would be more accessible to constituents. The most successful businesses are the ones that "get closest" to their "customers." Politicians' "customers," the voters, are scattered across the United States, not based in Washington.

--Ross Kaplan, "Congress Come Home: Faxes Can Do the Talking on Capitol Hill"; Star Tribune (9/27/1993)

Little did I anticipate that in the intervening almost two(!) decades, advancing technology would make the aforementioned proposal even more feasible -- and Washington-Wall Street dysfunction make it even more necessary.

Nor did I anticipate that the presumed reason for bringing legislators together -- that proximity would promote comity, consensus, etc. -- would have even less sway.

So, is that what Peggy Noonan is championing?

Unfortunately, no.

The headline of her piece has to do with imagined advice that FDR and Richard Nixon would give President Obama dealing with today's myriad policy "challenges."