Tom Ferguson on FinReg Bill: “Not Worth the Hype”
In a recent interview with the Real News Network, Roosevelt Institute Senior Fellow Tom Ferguson told host Paul Jay that the finreg bill is a disappointment when compared to major reforms like Glass-Steagall. “This thing is not worth the hype. It makes some marginal changes, but it does not attack any of the fundamental problems that got us into this sort of disastrous financial crisis back in 2008.”
Tom says that the bill does almost nothing to address the problem of too-big-to-fail and invests more power in the same regulators who failed to prevent the last crisis. Despite some changes to derivatives, “in the end they let the big banks keep about, probably, 80 percent of the derivatives business they’ve got.” Because of this, Tom predicts that “you are very likely sometime—maybe in the not too distant future if things don’t go well in Europe—to see yet another big bank brought down by some stupid business deal.”
Tom counts the one-time audit of the Federal Reserve and the creation of the Consumer Financial Protection Bureau as two of the bill’s modest victories. However, he believes it is a mistake to house the consumer agency in the Federal Reserve, which already has the power to create and enforce consumer regulations and has instead “sat back for years and let banks rip everybody off.”
As for whether the bill is worth passing in its current form, Tom says that “you’d probably better take this one, because you’ll probably get a worse bill next time,” but he’s sympathetic to those who want to start over. Ultimately, he views the bill as a victory for Wall Street lobbyists and a prime example of how corporate money can undermine and corrupt the legislative process. He says the banks “know they just dodged a silver bullet” and will wind up paying and changing far less than they should have. “In the end, we have a tale full of sound and fury, signifying nothing.”
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