Cracking Down on Wall Street

After three days of debate on the House floor, a Democratic proposal to increase federal regulation of Wall Street and banks was finally approved (by a relatively narrow margin of 223 to 202) this past Friday. This sweeping new measure would give the government a new range of powers including the ability to break up large firms, regulate hedge funds, oversee the derivatives market, and protect consumers against unfair mortgage practices through the creation of a new agency. This comprehensive plan, however, failed to gain a single Republican vote and even the votes of some moderate Democrats who argued that this new bill would give the government too much control over such things like credit and mortgages. Both parties are using their vote in the House to garner support for the coming midterm elections. Republicans who have opposed this bill on the claims that this new bill is money taken away from paying the national debt are hoping to reach out to Democrats in swing districts. Using Mayhew’s analysis of Congressmembers as “single minded seekers of re-election,” one can argue that such strong “position-taking” is a reflection of House members’ ultimate goal of re-election.

In light of the economic crisis, President Obama has made financial reform a priority and since then, has been persuading Congress to “act as quickly as possible.” Upon the approval of the massive bill, Obama stated that Americans have a “responsibility to learn from [the crisis] and to put in place reforms that will promote sound investment, encourage real competition and innovating and prevent such a crisis from ever happening again.” Such rhetoric used by the president re-iterates Neustadt’s idea of the “president as a clerk.”  The Madisonian framework of separation of government and sharing of authority forces the president to use his status and authority to persuade other political actors to carry out whatever agenda. However, even though the House has already passed some sort of regulatory reform legislation, the Senate has only just begun considering a similar bill. Financial lobbyists have vowed to appeal to not only Republicans, but also to moderate Democratic senators with a soft spot for businesses. Given that the lobbyists are successful, a handful of senators could prevent the casting of the necessary 60 votes to avoid a filibuster (which seems likely at this point). This is another example of why the Senate, according to Smith, “is a major chokehold in the legislative system.”