Re-Regulating the Market


President Barack Obama has become the chief sales officer for market regulation, a theme he has been labouring over for some time.  Cooper Union, its location pitched within a few miles of Wall Street, doesn’t seem to be tiring of luminaries with their addresses of various gravity and significance. 

The proposed regulations, at least on paper, look far reaching.  A body would be created to detect financial threats.  The Financial Product Safety Commission has the potential to be an effective institution. Consumer rights would be enhanced, and banks would be wise to adhere to their safety.  The more bad loans, the greater the instability of the system as a whole.  The Agriculture Committee legislation bars banks from trading in derivative instruments and forging deals with other clients, thereby subverting speculation.  The Banking Committee, however, disallows speculative trades with their own accounts, though its bill proves more lenient on banks in terms of setting up derivative arrangements for clients.

But a thought, to carry weight, must surely be believed and acted upon by the person advocating it.  Joseph E. Stiglitz was correct to point out that the regulatory system (if one can call it that) failed ‘partly because we had regulators who didn’t believe in regulation’ (Politico, Apr 12).  For that reason, a wary eye should be kept on the Federal Reserve, that less than impressive body that did so little to halt the slide to economic ruin. 

There was nothing new in this particular stage show by the President.  The message was familiar – Wall Street and Main Street again make their appearances, jostling for poll position in the American imagination.  Business America, seen as innovative yet reckless and unruly; and struggling, ‘common’ America, battered by financial ruin.  The consensus-driven politician calls the tune for unity, an arrangement of mutual wealth production: the boardroom managers on one side; the rest of America on the other, both shaking hands in improving the lot of USA Inc.  America must produce more and consume less.  Make money, and yes, oodles of it – but do it with a sense of corporate responsibility.

Obama’s desire to constrain the habits of a profligate and ruthless Gekko may be one thing; how he seeks to implement it may be quite another.  America is a business nation narcotised by the illusion of ‘free markets’. (When in history have markets been truly ‘free’ is hard to say.)  There remain strong swathes of the population (and Congress) suspicious about a burgeoning government.

For that reason, selling such ideas as the proposed Volcker Rule will be like selling the viability of amputation to a suffering patient.  Limiting bank size and the proprietary risks they can dabble has been and will continue be a formidable sell.  Social-Darwinian impulses continue to be rife, and these are hardly going to go away.  The Republicans are peddling a curious idea that their opposite numbers endorse, without qualification, the idea of a colossal fund designed to bail out ailing banks.  The Democrats will just have to show how the Republican drive for reform in this regard is virtually non-existent.  Wall Street is short of friends, and is hoping to find them in the GOP.  What is needed is a good shot of populism.

The risk for Obama now is not a fear that nothing will be done, but too little.  How derivatives are dealt with, or how consumer protection is hammered out in the final product, will continue to bother the policy makers.  Teeth will have to be inserted into public authority.  Banker and financiers must be made to feel that prudence will be looked upon favourably; and profligacy condemned and punished.  Excessive growth in bank liabilities might not always be easy to gauge, as Paul Volcker has admitted, but like ‘pornography, you know it when you see it’ (WSJ, Feb 4).

The armies of lobbyists representing the interests of Wall Street will be hoping that Congress spends time halting the momentum for change.  If the economy improves, the desire for reform will subside.  There are few chances of that happening thus far and the administration will have to continue making hay while the sun of reform shines.

BINOY KAMPMARK was a Commonwealth Scholar at Selwyn College, Cambridge.  He lectures at RMIT University, Melbourne. Email: bkampmark@gmail.com



October 08, 2015
Michael Horton
Why is the US Aiding and Enabling Saudi Arabia’s Genocidal War in Yemen?
Ben Debney
Guns, Trump and Mental Illness
Pepe Escobar
The NATO-Russia Face Off in Syria
Yoav Litvin
Israeli Occupation for Dummies
Lawrence Davidson
Deep Poverty in America: the On-Going Tradition of Not Caring
Thomas Knapp
War Party’s New Line: Vladimir Putin is Why We Can’t Have Nice Things
Brandon Jordan
Sowing the Seeds of War in Uruguay
Binoy Kampmark
Imperilled by Unfree Trade: the TPP on Environment and Labor
John McMurtry
The Canadian Elections: Cover-Up and Steal (Again)
Anthony Papa
Coming Home: an Open Letter to 6,000 Soon-to-be-Released Drug War Prisoners From an Ex-Con
Ramzy Baroud
Listen to Syrians: The Media Jackals and the People’s Narrative
Norman Pollack
Heart of Darkness: A Two-Way Street
Gilbert Mercier
Will Russia, Iran, Hezbollah and Iraqi Shiite Militias Defeat ISIS in Syria and Iraq?
John Stanton
Vietnam 2.0 and California Dreamin’ in Ukraine
William John Cox
The Pornography of Hatred
October 07, 2015
Nancy Scheper-Hughes
Witness to a Troubled Saint-Making: Junipero Serra and the Theology of Failure
Luciana Bohne
The Double-Speak of American Civilian Humanitarianism
Joyce Nelson
TPP: Big Pharma’s Big Deal
Jonathan Cook
Israel Lights the Touchpaper at Al-Aqsa Again
Joseph Natoli
The Wreckage in Sight We Fail To See
Piero Gleijeses
Cuba’s Jorge Risquet: the Brother I Never Had
Andrew Stewart
Do #BlackLivesMatter to Dunkin’ Donuts?
Rajesh Makwana
#GlobalGoals? The Truth About Poverty and How to Address It
Joan Berezin
Elections 2016: A New Opening or Business as Usual?
Dave Randle
The Man Who Sold Motown to the World
Adam Bartley
“Shameless”: Hillary Clinton, Human Rights and China
Binoy Kampmark
The Killings in Oregon: Business as Usual
Harvey Wasserman
Why Bernie and Hillary Must Address America’s Dying Nuke Reactors
Tom H. Hastings
Unarmed Cops and a Can-do Culture of Nonviolence
October 06, 2015
Vijay Prashad
Afghanistan, the Terrible War: Money for Nothing
Mike Whitney
How Putin will Win in Syria
Paul Street
Yes, There is an Imperialist Ruling Class
Paul Craig Roberts
American Vice
Kathy Kelly
Bombing Hospitals: 22 People Killed by US Airstrike on Doctors Without Borders Hospital in Kunduz, Afghanistan
Ron Jacobs
Patti Smith and the Beauty of Memory
David Macaray
Coal Executive Finally Brought Up on Criminal Charges
Norman Pollack
Cold War Rhetoric: The Kept Intelligentsia
Cecil Brown
The Firing This Time: School Shootings and James Baldwin’s Final Message
Roger Annis
The Canadian Election and the Global Climate Crisis
W. T. Whitney
Why is the US Government Persecuting IFCO/Pastors for Peace Humanitarian Organization?
Jesse Jackson
Alabama’s New Jim Crow Far From Subtle
Joe Ramsey
After Umpqua: Does America Have a Gun Problem….or a Dying Capitalist Empire Problem?
Murray Dobbin
Rise Up, Precariat! Cheap Labour is Over
October 05, 2015
Michael Hudson
Parasites in the Body Economic: the Disasters of Neoliberalism
Patrick Cockburn
Why We Should Welcome Russia’s Entry Into Syrian War