The Corner

Define “Cosmetic”

The American Prospect’s Tim Fernholz disagrees with my take on the Dodd-Shelby compromise. I think the changes were significant; he thinks they were cosmetic. At the risk of getting into a very boring debate about something so subjective, let me just say that I do not find Fernholz’s analysis persuasive. He has either misread the original language on resolution authority (which provided the FDIC with more flexibility than Fernholz lets on) or he doesn’t think the precise wording of statutes is all that important. And this passage surprised me:

The Republican “near-total” victory [on the issue of federal loan guarantees] is allowing Congress to vote to approve the request instead of disapproving. Pretty much the definition of a cosmetic change.

Really? I thought it was commonly understood that the difference between the two is significant. For one thing, the president can veto a congressional resolution of disapproval, so the bar that opponents would have had to clear to block loan guarantees would have been much higher. This is not the same as forcing the administration to do the difficult work of convincing Congress to acquiesce to another bailout.

If this is Fernholz’s idea of an insignificant difference, I’m not sure many people would agree with his definition of a cosmetic change.

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