History Repeating Itself?
April 1st, 2008I have a few thoughts on Secretary of the Treasury Henry Paulson’s recommendations for increased federal financial regulation. The first catalyst:
When U.S. Treasury Secretary Henry M. Paulson Jr. unveiled his proposal to overhaul federal financial regulation Monday, President Bush was airborne, speeding out of Washington, D.C., as fast as Air Force One could carry him. That might have been a coincidence. But when the president’s spokeswoman was asked about the plan, she made clear that the White House was treating the proposal as Paulson’s, not Bush’s.
“What I would tell you from the president’s point of view is that we trust Secretary Paulson to put forward what he thinks is a constructive plan that is well thought out,” spokeswoman Dana Perino told reporters on Air Force One en route to Ukraine.
For all the pomp of the Treasury rollout, even Paulson acknowledged that his long-term vision of a streamlined federal regulatory system probably will remain just that — a vision, requiring more debate and more lawmaking than is possible in the last months of a lame-duck administration. But the one thing he might have done — and it might have been his goal all along — is to set the terms of the debate over regulation, at least for the foreseeable future. Those terms reflect his Wall Street pedigree more than the cultures of Washington or Main Street.
re: bold — are you kidding me? This is reminiscent of Secretary Paul O’Neill’s attempts to reform corporate law that were treated by the White House as his recommendation, not theirs, due to the overwhelming and negative response from Wall Street. The proposed reforms subsequently languished without Presidential support and led to O’Neill’s firing. Now Bush’s White House appears ready to leave Paulson hanging, and it leads me to wonder how much control Cheney has over economic policy still and raises questions about the integrity of process in this White House. Why are proposals being made, publicly, that are not embraced by the Administrationm and why does this happen most often with economics and environmental policy? I wonder if there is another rift in the White House on economic policy (if you do not know what I refer to, Google The Price of Loyalty and read it). There is an alternative explanation for the break between Bush and Paulson, if there is one (as implied by this news story), and it is similar to the “break” between Truman and Churchill after the Prime Minister gave his famous Iron Curtain speech. Truman endorsed it beforehand and then denied approving of it in the press, when the speech was criticized; the goal was to get the ideas expressed, experimentally, by someone other than the President who would still have credibility on the subject, and this might be the case here but perhaps I am giving too much credit to George W. Bush’s Administration and should be looking at its history and not Truman’s.
A second thought is a political and historical consideration: why on Earth would the Department put this out there during the election year when it is almost certain to be murdered with scorched-Earth compassion? If the ideas are worth considering, and I believe they are despite this argument that it is a power-grab for the Bush Administration (if it is a power-grab it is for future governments, not this one, but it is not a power-grab and it should be considered on its own merits, not the Bush Administration’s), then I have to confess frustration that ideas which might be beneficial to the United States will not receive any fair consideration. Ideas in politics are fragile and should be handled with care.
What do I think of his proposals? I’ve never been in favor of undue burdens on the marketplace or unnecessary regulation but it makes sense to me that mortage brokers and lenders deserve some oversight and rating scales should be modified. This is my weakest political realm, however, and I might be mistaken, but I think if I were President I’d trust this Treasury Secretary’s views on the economy, on the whole, and as a private citizen I think I do, too. That said, I’m open-minded, and will be watching the situation unfold, and will likely modify my opinions as different points are debated over. I do have a big problem with the President flying out of the country while the proposal is presented because it signals a rift and demonstrates a lack of Administrative support. If the President is not in favor of it, the plan should not leave the Secretary’s office and they should continue to discuss it until the White House has come up with a front they can agree on. Even if they disagree, governments are supposed to keep those between them and the rest of the government must have faith in the President’s judgement. Anything else dooms proposals, and it appears that there is a lack of consensus building within the White House in relation to its own matters.