Like many others, I left the Republican party in disgust over eight years of big government, topped off at the end by the Bush-Dodd-Frank bank bailout. In opposing the Dodd-Frank financial regulation bill, Republicans have made an important step in rejecting the Bush-Paulson legacy of corporate bailouts. For the Dodd-Frank bill does not end bailouts, nor does it end “too big to fail.” Instead, it further codifies both as the law of the land.
Some will suppose Republicans simply wanted to deny Obama another legislative “victory,” as argued by the New York Times. Such a view so borders on the absurd as to barely merit being taken seriously. If anything, Republicans have spent political capital opposing Dodd-Frank, since Democrats will endlessly paint them as fronts for Wall Street (this despite the record number of Wall Street executives filling the Obama administration).
Key Republicans, such as Banking Committee ranking member Sen. Richard Shelby and Sen. Bob Corker, worked with Sen. Dodd, in good faith, to craft a bill that would actually help prevent financial crises and end bailouts. Sadly, that good faith was not returned. What is now clear is that Dodd and the White House were operating under a partisan 60-vote strategy from the beginning. Instead of addressing the actual problems facing our financial sector — loose monetary policy, Fannie and Freddie, tax incentives for leverage — Democrats chose to pursue their long-time objectives of rewarding the trial bar and unions. This was never about protecting the taxpayer or the economy, but about rewarding the special interests that got the Democrats elected.
In opposition, the Republicans seemed to have found something they lost in the majority — a sense of putting aside the politics and opposing bad policy for the simple reason that it is bad policy. Let’s hope this is the beginning of a trend.
– Mark A. Calabria is director of financial regulation studies at the Cato Institute.