As if American Enterprise Institute scholar Norman Ornstein's piece this morning weren't enough, here comes another AEI fellow, Michael Barone, whose Washington Examiner dispatch appears under the headline, "GOP Should Push Tough Regulation of Wall Street."
Republicans have good policy and political reasons to argue not for weaker regulation but for tougher regulation of Wall Street firms. They should oppose resolution authority that helps the big firms and, while they're at it, seek to increase the capital requirements on such firms that are left vague in the Dodd bill. Democrats have taken the side of Wall Street. Republicans should stand up for Main Street -- and taxpayers -- instead.
Mr. Barone is such a shrewd political analyst -- a genius, really, -- and a gentleman that I hesitate to disagree, but, as I wrote at greater length in my review of Jerry Muller's book on Capitalism and the Jews, these kinds of distinctions between Wall Street and Main Street are problematic, with origins in ideas about usury.
As a political matter, the Republicans as the party of "tougher regulation" risks blurring or contradicting what might be the party's overall winning message of being for smaller government and more economic growth.
And as a policy matter, I don't share Mr. Barone's apparent confidence that smarter or tougher regulators will be so smart or tough that they are able to prevent whatever they are supposed to be preventing. It's a false hope. In addition, increased capital requirements are actually what Wall Street is asking for, so it'd be a trick for the Republicans to pose as the scourge of Wall Street while handing that to them.
Finally, Mr. Barone's suggestion that the Republicans should punish Wall Street with tougher rules in part because Wall Street campaign contributions favor Democrats (at least that's how I read what he wrote: "Republicans owe no political debt to the big Wall Street firms. In the 2008 campaign cycle, according to the Center for Responsive Politics' opensecrets.org Web site, Goldman Sachs personnel contributed $4.5 million to Democrats and just $1.5 million to Republicans. Add in three other big Wall Street firms -- Morgan Stanley, JPMorgan Chase and Citigroup -- and the total take was $12.7 million to Democrats and $6.7 million to Republicans.") seems also to risk blurring or contradicting what might be the party's overall winning message, or at least a principled message, of being for a rule of law that treats everyone equally, regardless of whether they are friends or campaign contributors to those in power.