Financial Reform: Don’t let the perfect be the enemy of the good
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I’m looking at the many facets of the financial reform bill that Chris Dodd, chairman of the Senate Banking Committee, will unveil on Monday. And I’m wincing at the compromises, and gagging at some of the wrong-headed aspects. But I want it to pass. It’s better than nothing.
Still, I have to vent about where it falls short — as the scorpion would say, it’s in my nature.
The bill gives shareholders the right to cast a non-binding vote on compensation packages — the so-called say on pay. I wish they’d held out for a binding. vote. The thought, of course, is that directors will be swayed by what shareholders think, and thus vote accordingly. I have seen zero sign of this in corporate America in the past, and doubt we’ll see it in the future. But the fact that so many companies are so strongly opposed to this means that I may be wrong, that shareholder opinion does count for something. So, I definitely want this to pass.
It also gives shareholders proxy access, which means they get to nominate their own slate of directors. I don’t see a downside to this one — but I wonder if it’ll make much of a difference. The big institutional investors probably have enough clout to meddle in board elections if they want to anyway — and little guys like me are unlikely to participate. Then, again, corporations hate this one, too, so in case I’m wrong, I hope it passes.
Then there’s the question of a consumer financial protection agency. Lord knows, we need one. But the bill calls for it to come under the Federal Reserve’s umbrella. Excuse me? Sometimes it’s good to make the troublemaker monitor (check out my earlier post on Gary Gensler) but not always. The Fed’s sympathies are with the banks, and if the bank’s sympathies were with the consumers, we would not have had a foreclosure epidemic, and we would not need this bill.
Still — and yeah, I know I’m repeating myself, sometimes you have to do that for emphasis — it’s better than nothing. The president would get to appoint the director of the agency. And if he appoints someone who knows how to exploit public opinion, that person could probably use the specter of a press war to get Daddy Fed to let him/her pass strict rules, and to enforce them. (hey, a gal can hope, no?)
The bill forbids states to write their own, stricter rules. That worries me, but I’m not ready to condemn it…yet. If the federal rules are strong enough, it makes sense to save banks and other financial institutions the bureaucratic horror of dealing with a patchwork quilt of regulations. My personal jury remains out on this one.
I feel strongly about regulation of derivatives and other esoteric instruments that most of us simply don’t understand. And fortunately, that’s included in this bill. But I’m undecided — because I admit I just don’t know enough — about aspects of the bill that affect the Fed itself.
It suggests that the Fed retain authority over any huge financial institutions — not just banks, this would include the AIG’s of the world — but cede authority over smaller ones. I really don’t know if it makes sense to have one set of rules for “too big to fail” and another for small companies.
But I do love one provision just on its face: Goldman Sachs and other financial companies that adopted bank holding status in order to take advantage of cheap money and loan guarantees would be prohibited from shedding that status to avoid stringent regulation. Truth? I don’t know if it is constitutional or otherwise legal to force a company to retain a certain status — if so, companies couldn’t so easily switch between private and public status. But it would take a long expensive battle to get this overturned, so I do so hope it passes.
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I’m not commenting on your post because there’s anything in it I disagree with- seems about right to me- but I am writing in to say just how truly, truly sick I’m becoming of the phrase “Don’t let the Perfect be the enemy of the Good”. Too often these days, that translates out to “Don’t let the Necessary be the enemy of the Expedient”.
It’s become a cliche — but then, cliches become cliches because they’re true. And I find it a truly helpful concept — so sorry, but I can’t promise I won’t use it again, and again and….
In response to another comment. See in context »I’m with ncfrommke.
“Don’t let the Perfect be the enemy of the Good” is the mantra of defeat. When a politician says it,he/she really means, “I lack the political will, or the imagination, or the desire to go against the entrenched interests and fight for substantive change.” When uttered by a citizen, it translates to, “I can see no reason to push elected officials to grow a spine. I support those in power who begin all legislative fights from a position of compromise/good because it’s a waste of time to fight for the more perfect. We can’t/won’t win.”
I have long held that it is the good that is the enemy of the perfect, not the other way around. People will choose the perfect over the bad because it’s better. But they’ll choose the good over the perfect because the good is the easy way out. It requires little of us in the form of struggle or sacrifice. The good is lazy.
The only “truth” this cliche illustrates is the truth that people will choose the easy way out if you let them.
if we were talking theoretically I’d agree with you. And if this were a year ago, I’d agree with you too. But we are talking about legislation we’ve been screaming for since before Obama was elected. And after all this time — and Dems losing Massachusetts — I do indeed sadly conclude that “it’s a waste of time to fight for the more perfect. We can’t/won’t win.”
In response to another comment. See in context »I hope for all our sakes that I wind up being wrong. Trust me,I will gleefully admit it if given half a chance
Amen. “Don’t let the perfect be the enemy of the good” is another way of saying that old chestnut “The art of the possible”. To both of those tired excuses I say–horse hockey.
What they really mean is, we have to appease the corporations and PACs that are paying for our re-elections, so therefore we’re going to have to ignore the will of the people who voted for us. Heaven help us, because clearly our elected officials in Washington couldn’t care less.
In response to another comment. See in context »I hate the power of money and lobbyists as much as you do — but that doesn’t change the fact that it exists. So I’m sticking to my (unpopular) guns here — I’d rather Washington threw me a chop, but if I have to settle for a bone, I’ll do that rather than starve.
In response to another comment. See in context »I don’t know the exact rules of elections, but it would be an interesting experiment to have a total boycott on the 2010 and 2012 election days–i.e. what would happen if nobody went to the polls? Would it finally demonstrate to our politicians that business as usual isn’t acceptable? That the people want real representation of their interests and not those of corporations? Or would it be met with a yawn and a shrug of shoulders? Don’t know about you but at this point I’d be willing to try almost anything to unblock the logjam in Washington.
In response to another comment. See in context »Nah, not voting wouldn’t bother them at all, it would just ensure the status quo. If you’re into civil action, would make more sense to mount a write-in campaign — everyone goes to the polls and votes for Bono or something like that. Not practically doable, of course, but delicious to contemplate
In response to another comment. See in context »Isn’t Dodd the crook of the Senate…why isn’t he in prison?