Financial Reform in a World Where Committee Chairmen Think Regulators Should Serve Banks

Early efforts to force derivatives onto a central clearinghouse are apparently running into some trouble as big banks try to shut everyone else out. That’s an important reminder that all the ket issues in financial regulation really have to do with implementation. Will regulators have the opportunity to do the right thing? And will they be encouraged to do so?

Spencer Bachus, Republican of Alabama and new Chairman of the House Financial Services Committee seems determined to make things work out as poorly as possible:

“In Washington, the view is that the banks are to be regulated, and my view is that Washington and the regulators are there to serve the banks,” he said.

Hm. The same article notes that “[w]ith Sen. Richard Shelby, R-Ala., as the top Republican on the Senate Banking Committee, it further cements Alabama’s legislative power on issues that affect the industry and consumers.” Fortunately for America, Alabama has a legendary good-government political culture that’s allowed it to climb to the top of so many social indicator league tables. Nothing could possible go wrong.