The messy evolution of the legislative process, cont.

Bulletin from Pollyannasville:  the health care and financial reform bills disappointed purists of all persuasions.  But both came out stronger than most progressives familiar with the legislative process could have hoped.  In both cases, the widely forecast denuding of key provisions by powerful lobbies was largely forestalled.  In both, the process was more open, more closely tracked by interest and public interest groups and media observers of all stripes, than any prior legislation.

I have more than once referred  to the health care bill  postmortem by Andy Stern, ex of SEIU. His first observation below is tactical. But his second makes an historical argument for what has happened to the legislative process:

First, the longer you wait, the harder it gets and the worse it gets. Time for deliberation is appropriate, but indecision and delay are counterproductive to getting something done. The choices don't get easier over time. They get harder.

Second, people have to decide whether people in the same party will use procedural tricks to trip up their teammates. Or whether parties, particularly the Democratic Party, appreciates that the special deals and earmarks that might traditionally have been part of the process no longer work. Politicians used to bring kickbacks home to their district, but now people think the system is corrupt.

First, do no harm...

It's no secret that Obama is an incremental reformer, given to large vision and small steps, inclined by temperament and a personal theory developed over the course of his working life to move the battleship by degrees.  Under pressure in April 2009 to nationalize some of the nation's largest banks, he voiced as a guiding principle of federal intervention: "First, do no harm." Of the sweeping health care reform law, cast by Republicans as a socialist reengineering, Ezra Klein noted, "it is comprehensive reform with an incremental soul" -- leaving employer-based health insurance largely untouched, building the exchanges on private for-profit insurance, implementing cost control largely by incentive and demonstration project.

Today the Times profiles one of the chief architects of the financial reform legislation now on the brink of passage, Obama appointee to the Fed's board of governors Daniel K. Tarullo.  Tarullo, who far more than Obama speaks in what the Times calls "characteristically professorial tones," helped forge the approach to the megabanks that frustrates so many critics: rein them in (a bit) rather than break them up (for now).  His explanation of that approach strikes me as a kind of distillation of the Obama approach to reform, for good and/or ill:

“I am intellectually open to the proposition that the only way to achieve the optimal balance between financial stability and the efficient intermediation of capital flows might be to break up some of the largest institutions,” Mr. Tarullo said. “But given the uncertainties, I would probably be inclined to begin with other measures, such as more stringent capital and liquidity requirements for the largest, most complex firms.”

Does that mean "save radical reform for the next crisis" or tighten the reins (and wield the carving knife) by degrees?

The Senate gets into the swing of bankwhacking

Some months ago, as health care reform languished and the Senate ground nearly to a halt, one read frequent laments that the moment for sweeping financial reform was being wasted -- that by the time the Senate got around to full consideration, memories would have faded, rage against the banks cooled, and lobbyists' hooks sunk ever deeper. 

Reasonable worries, perhaps. But those who despaired of strong reform did not reckon on HCR passage changing the dynamic in Congress; or on the pressure that would be generated by bringing the bill to the floor just as election season heated up; or on the fresh spur to rage afforded by an SEC suit (and criminal investigation) against the nation's most lucrative financial institution.

Just nine days ago, Jonathan Chait was marvelling at the strength of the Dodd ill as it came to the floor. Now, the WSJ reports, a tide of amendments is bidding to restrict financial institutions' activity far more radically:

Sens. Ted Kaufman (D., Del.) and Sherrod Brown (D., Ohio) plan an amendment that would prohibit any bank from ever holding more than 10% of the country's deposits and put strict caps on the debt banks issue.

Sens. Maria Cantwell (D., Wash.) and John McCain (R., Ariz.) have worked on an amendment that would force commercial banks to separate from investment banks—revisiting the Glass-Steagall Act of the 1930s.

Sens. Jeff Merkley (D., Ore.) and Carl Levin (D., Mich.) plan a provision to forbid banks with federally insured deposits from certain trading activities.