Politicians are making like Santa Claus and asking business for wish lists of regulations it would like to get rid of.
Rich people are heading out for shopping sprees at Tiffany & Co. and not feeling ashamed about it anymore.
One economist at the World Economic Forum in Davos, Switzerland, is even hyping an imminent “super-cycle” of global economic growth. And to think we’ve been stressing about trifles like fat, dangerous banks that could bring down the economy.
The financial crisis has become the inconvenient memory we’re losing interest in, which would be no problem if only we had finished the nasty job of fixing the system’s flaws before the party got going again.
Not that it wouldn’t be easy to get swept up in the good news. Zillionaires are sleeping soundly again now that their tax cuts have been renewed, and how can something like that not give you a warm and fuzzy feeling?
While the affluent resume their collective beauty rest, though, some of the reforms we cheered when the imperfect, better-than-nothing Dodd-Frank Act became law last July are being quietly undone.
Will we look back at 2010 and 2011 as the period when we planted the seeds of the next financial crisis? We sure seem to be headed that way:
-- Investor protection is out. Remember all the talk about making the markets safe for investors? Well, get over it. Dodd-Frank instructed the Securities and Exchange Commission to set up five new offices, including one to handle whistleblower cases, and a committee to represent the interests of investors on issues like fees and disclosure. But on Dec. 2, the agency put those efforts on hold because of “budget uncertainty.”
A frozen budget has also forced the SEC to scale back its plans to get up to speed with the dynamics that resulted in the so-called flash crash on May 6, 2010, when the Dow Jones Industrial Average fell almost 1,000 points in a matter of minutes. The agency had planned to hire five math whizzes acquainted with the sorts of financial algorithms involved in the instant meltdown. Instead, it’s settled for one.
-- Pandering to business is in. Darrell Issa, the car- alarm millionaire twice accused of auto theft (both charges were dropped), and now the California Republican who is chairman of the House Oversight and Government Reform Committee, sent letters to 150 companies and business trade groups in December asking them which regulations and rules might be restraining job growth. He didn’t really have to ask, because we all know that the answer, of course, is: “All of them.”
But it was a nice gesture anyway. By the middle of this month President Barack Obama was jumping on the business-friendly bandwagon with an op-ed in the Wall Street Journal announcing an executive order “to remove outdated regulations that stifle job creation and make our economy less competitive.”
If you’re getting confused, keep reminding yourself that we don’t talk about the employment Armageddon to job creation that resulted from the financial meltdown anymore. Instead, we divert our attention to the curse of regulations, taking care never to acknowledge that unregulated products such as derivatives helped fuel the meltdown that, well, helped destroy the jobs.
-- Obama is making friends with the U.S. Chamber of Commerce.
Well, OK, Obama and Chamber President Thomas Donohue aren’t quite to the point where they’re ready to jet off to share a chalet at Davos, but it’s almost as stunning to know that the Chamber invited Obama to speak at its headquarters on Feb. 7 --and that Obama accepted. Donohue even had something nice to say after Obama’s Wall Street Journal piece (“a positive first step”), and after Obama’s appointment of William Daley, a bigwig at JPMorgan Chase & Co., to be White House chief of staff (“a man of stature”).
Out With Volcker
When the president refashioned his Economic Recovery Advisory Board into a shiny new Council on Jobs and Competitiveness, Donohue of course liked that, too. Obama even replaced the board’s chairman, former Federal Reserve boss Paul Volcker, with General Electric Co. Chief Executive Officer Jeffrey Immelt, whose company, like Daley’s, enjoyed bailouts during the crisis. “An excellent choice,” said Donohue, who just seems to be getting happier and happier these days.
-- It’s more acceptable than ever to trash-talk even the regulators who haven’t had a chance to screw up yet. Harvard professor Elizabeth Warren invented the idea of an agency that would protect consumers of financial products like checking accounts and mortgages, and as far as business is concerned, that’s strike one.
Strike two must have been that politicians feared she would have done the job -- protecting consumers, that is -- quite well, because Obama had to appoint her via a back door in September to set up the Consumer Financial Protection Agency, giving her the title of special adviser rather than go through the contentious Senate confirmation hearings needed to officially give her the job.
Warren got a letter on Jan. 18 from Congressman Randy Neugebauer, chairman of the House Financial Services Subcommittee on Oversight and Investigations, that thrashed the new agency as “a fatally flawed plan.” A particular problem, in Neugebauer’s view, is that the agency doesn’t have to get approval from Congress for most of its funding, which the congressman would like to change.
Right, that’s an idea we all can relate to. Congress has overseen the SEC and its budget through the fiasco of Bernard Madoff and the biggest financial crisis in 80 years, and where did that get us? Is this a case of déjà vu, or what?
Susan Antilla is a Bloomberg News columnist. The opinions expressed are her own.)
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