Senate Watch: Stand By For Another Major Economic Crisis

If you think health care reform has been an unsatisfying test of the government's ability to deal with our pressing problems, brace yourself for bigger disappointment in its attempt to bridle Wall Street. This is when the true heavies go to work and, as opposed to the medical industry lobby, the moneychangers fear not the wrath of their clients or, as Scripture tells, any higher power.

Certainly not that of the Congress or the president whose powers they have so confidently purchased. That is how we got into this mess. The bankers wrote the rules of the road that allowed them to exceed all reasonable limits when Democrat Bill Clinton was in the White House. And when the crash came, it was the Republican George W. Bush who made their problems go away. Having survived that disaster of their own creation, they are not about to let anyone make them change their ways.

It will definitely take more than the likes of Connecticut's lame-duck Sen. Christopher Dodd, a likely candidate for more lucrative employment in the financial sector that he has served so faithfully. On Monday he made a big show of introducing legislation to rein in Wall Street, having failed to elicit a single Republican vote after months of caving in. He has abandoned his earlier proposal for a truly independent regulatory agency that would challenge the Fed, which got us into this jam. His bill rejects a public audit of the Fed, where he would house what remains of the president's proposed consumer protection agency.

There is only a nod in the direction of a return to the Glass-Steagall Act's separation of investment and banking firms, a regulation that Dodd, along with New York Democrat Charles Schumer, helped kill a decade ago. As The New York Times reported on Oct. 23, 1999: "Dodd, whose state is home to the nation's largest insurance companies, and Schumer, with strong ties to Wall Street, have long sought legislation to repeal the Glass-Steagall Act."

That's what legally made possible the too-big-to-fail mergers of insurance giants like Travelers and AIG with banking companies. As Peter Eavis pointed out in Monday's Wall Street Journal, Dodd's current bill "still flunks the AIG test," in that "if the Senate bill became law, it looks like the government could still find itself making the sort of payments it made to AIG counterparties." And that's before the lobbyists go to work. --Robert Scheer

"I'm sure by the time all the banking lobbyists are done the Senate bill will become one of the key primary sources for students 100 years from now on how broken the Senate of the early 21st Century was. But in terms of lobbying there seems to be nothing that needs to move. Which should worry us all." --Mike Konczal

[Dood's new bill] reads like the chairman and his Senate colleagues couldn't make up their minds about who or what caused the financial crisis or who could be trusted to fix the system. They've come up with a set of jury-rigged patches designed to placate as many interest groups as possible while preserving the existing regulatory apparatus and prerogatives.... There are so many political accommodations involving carve-outs and size limits and overlapping responsibilities that it creates exactly the kind of complexity, the opportunities for regulatory arbitrage and the lack of accountability that got us into this mess in the first place --Steve Pearlstein