Bad Amendments to Fear

Let’s maybe take a moment to appreciate the fact that the much-criticized Harry Reid not only succeeded at shepherding a health care bill to passage in the face of relentless obstructionism, he now scored a big strategic win in breaking down the GOP filibuster of the motion to consider the financial regulation bill. For someone I’m constantly hearing derided, he seems to be accomplishing an awful lot.

Next up, Tim Fernholz tells us we should worry about bad amendments:

Republicans will bring up their own amendments; this will likely include exemptions for specific industries — auto dealers, payday lenders — from consumer protection rules, federal preemption of state regulators, new loopholes in derivatives regulation, weaker prudential standards, and even radical re-designs as part of the bill. While it won’t be easy for Republicans to pass amendments in the face of a united Democratic caucus, playing to regional interests could result in a few successful poison pills. Republicans may even offer new language on Fannie Mae and Freddie Mac, and issue Democrats are reluctant to talk about — they want to want to deal with it separately from the current legislation.

I think it’s most important to worry about loopholes, and also that Tim is being a bit too partisan here. One of the fundamental dynamics in congress is that everyone’s a whore for his home-state industries. So for any possible loophole, there are going to be a number of possible Democratic votes. What’s more, there’s a problematic public opinion dynamic here in that support for regulatory reform is strong but seems specifically linked to invocations of “Wall Street”:

This leaves politicians a lot of room to define their loophole as for something other than bad old Wall Street. For example, I saw Saxby Chambliss on MSNBC this morning complaining that the bill would treat “small community banks” in just the same way as “Wall Street banks.” He didn’t offer a concrete legislative proposal, but you could imagine some giant loopholes under this rubric. Is my bank, PNC Bank with $270 billion in assets, just a wee little community bank because it happens to be located in Pittsburgh?

We also especially need to worry about the dynamic that can be unleashed because people are allowed to vote for amendments even with no intention of voting for the underlying bill. You can have a coalition of Republicans and moderate Democrats load the bill down with amendments liberals oppose. Then the Republicans can vote no anyway. At which point maybe the liberals vote no too, and now the bill can’t pass. And this time it’s hard to mobilize public outrage against the obstructionists, because it’s nobody’s fault in particular.