Politicians Forget Their Accountability for the Financial Mess

by Odysseas Papadimitriou on September 23, 2009

HypocrisyOn the anniversary of the collapse of Lehman Brothers, President Obama warned the financial community that there wouldn’t be any more bailouts and that the age of Wall Street greed and reckless mismanagement would have to come to an end.  We completely agree with this position, but we also think that it is hypocritical that some modified version of this sentiment wasn’t delivered to Congress as well.  

Whatever is said about Credit Default Swaps and the other exotic financial products that caused the near total collapse of the global financial system, they were (and still are) legal.  Moreover, they were made legal after 91 years of being illegal by the  Commodity Futures Modernization Act of 2000 which was piggybacked onto a much larger bill, presented at the last minute before Christmas recess, allowed to bypass committees and was passed by Republicans and Democrats alike.  It was this law that created an unregulated $63 Trillion market  and set on its course to blow up in the face of the American taxpayer.   

It’s ridiculous to assume that the American financial sector alone destroyed the economy.  They couldn’t have done it without Congress and the extraordinarily ridiculous way in which Congress allows itself to operate.  On the anniversary of the collapse of Lehman Brothers, President Obama should have made a speech to America’s lawmakers as well, asking them to reform their ways so as to make sure disastrous laws aren’t passed without all members of Congress having ample time to read them and debate them.  While we agree that a chastisement of Wall Street is in order, equal weight ought to be given to the lawmakers without whom this disaster could not have been created.  Wall Street lit the match, but it was Capitol Hill that first doused the economy in gasoline.  And for most members of Congress, the reason that they voted for these disastrous laws was because they didn’t have time to read them or hear them discussed on the floor of the House or the Senate since they were piggybacked into a large and routine funding bill.

In the end, what we need is a balanced effort towards reform of both the U.S. financial regulatory system and the way that Congress conducts business. If Congress needs the appropriate time to read the laws before voting on them, then by all means, this should be part of the way Capitol Hill does business.  We can’t let dangerous legislation get passed because of the practice of piggybacking or the passing of bills at the last minute just to get them out of the way before vacation.

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