Wednesday, June 30, 2010

Beating A Dead Horse

The notion that we ought to take our time to study and understand a problem before reacting to it, especially when it comes to something as complicated as legislating, is one I've discussed several times, most recently with regard to financial services reform.  Still, Congress is on the precipice of enacting a massive financial services reform law despite the fact that the Commission that Congress itself created to better understand the causes and nuances of the crisis has not yet completed its work.


One proponent of reform, federal judge and author of A Failure of Capitalism on the financial crisis, Richard Posner, explains this phenomenon:
But just as politics requires that President Obama be seen to be doing something about the oil leak in the Gulf of Mexico, though there is nothing he can do, so politics requires that Congress be seen to be doing something to prevent another economic disaster, though there is nothing it needs to do.
Posner doesn't say that the government doesn't need to change its policies, but that the changes necessary aren't changes in the law.  In short, they can be made largely without Congressional action.  Now, that's a problem, because if Congress doesn't solve the problem by passing a bill (the only thing Congress does is change the law by enacting bills) then Members won't be able to claim credit by the November election.

And THAT's why its rushing to pass legislation despite the ongoing work of the Financial Crisis Inquiry Commission - a government body created BY CONGRESS to report on the crisis's cause.  The Commission's work is ongoing (today, in fact, it is holding a hearing on the part played by derivatives, the regulation of which was one of the most contentious issues that delayed the financial services bill) yet their work will not be factored into the legal reform.

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