Why Bank Reform Can't Wait

The health of the banking system affects us all. It's estimated it could cost more than $200 billion to repair the shattered system even if the economy improves. Much of that money is going to have to come from the taxpayer. Need more proof? The bank "credit crunch" is dampening economic growth largely by starving small business of credit. And smaller businesses are a critical source of economic innovation in the U.S. Indeed, small business creates one of every two new jobs.

That's why Washington's failure to pass a comprehensive bank-reform bill tops the list in legislative ineffectiveness in a year with lots of competition. Sure, we hear all the excuses by the Bush Administration and Congress. The lamest is that the insurance companies, Wall Street firms, big banks, small banks, and just about anyone with a money stake and a political action committee bribed and cajoled to save their bacon. So what? Government is about resisting these pressures and making hard decisions in the national interest.

Bank reform is not a parochial issue, and a bill ought not to be shaped by special-interest pleading. Decisions made today will affect the future flow of investment capital, the strength of small business, the nation's future competitiveness, and the odds of future taxpayer bailouts. A bill limited almost exclusively to funding deposit insurance is a cop-out that will cost taxpayers billions more than true bank reform. We are about to enter an election year, and each Presidential candidate should spell out in detail his plans for overhauling the banking system. And then we need a pledge from each that a bank-reform bill will be a top priority in his first 100 days of office.

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