Yes, Recalcitrant Republicans Are Blocking Tough Financial Regulation

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Tyler Cowen has a number of smart things to say in his skeptical take on Johnson and Kwak’s 13 Bankers but this seems a little silly: “If we don’t in this year ‘get tough’ with banking regulation, it’s because our government itself doesn’t want to, not because of some stubborn recalcitrant Republicans.”

“Our government itself” is a set of political institutions over which Republicans exercise some influence. On the Securities and Exchange Commission, for example, there are two Republican members both of whom voting against suing Goldman Sachs. But since they were outvoted by the three Democrats, the suit has gone forward. In the House of Representatives all the Republicans voted “no” on a regulatory reform bill, but since Democrats have a majority it passed. The bill that passed was, however, weaker than a bill that could have passed had the Republicans all agreed to abstain from voting. But since they insisted on voting, a minority faction of Democrats was able to weaken the bill. Right now, there’s a reasonably tough regulatory bill in the Senate, but Harry Reid can’t bring it to the floor for consideration because 41 Republicans out of 41 are blocking him.

So, yes, our government itself doesn’t want to get tough. But that’s not in contradiction to recalcitrant Republicans are keeping us from getting tough. Recalcitrant Republicans are the means through which it becomes the case that the government doesn’t get tough.