The BS of Obama ‘financial reform’

Once again, Just.Another.Politician.™ isn’t wearing very many clothes, as Joe Nocera shows us in detail. In comparing Obama’s work to FDR’s, he says:

Obama plan is little more than an attempt to stick some new regulatory fingers into a very leaky financial dam rather than rebuild the dam itself. Without question, the latter would be more difficult, more contentious and probably more expensive. But it would also have more lasting value.

He then goes on to note that, on the surface, the plan looks impressive and broad-ranging. Gee, isn’t that what would could have said – and I did say – about Obama the first Tuesday of November 2008?

And, beyond my snark, he notes just what’s wrong with the Geithner-Summers-Obama fiscal “regulation” plan:

The Obama plan accepts the notion of (some banks) being “too big to fail.”

In other words, the plan fails to fix what it was allegedly drafted to fix!

Or take derivatives. The Obama plan calls for plain vanilla derivatives to be traded on an exchange. But standard, plain vanilla derivatives are not what caused so much trouble for the world’s financial system. Rather it was the so-called bespoke derivatives — customized, one-of-a-kind products that generated enormous profits for institutions like A.I.G. that created them, and, in the end, generated enormous damage to the financial system. For these derivatives, the Treasury Department merely wants to set up a clearinghouse so that their price and trading activity can be more readily seen. But it doesn’t attempt to diminish the use of these bespoke derivatives.

In other words, the plan fails to fix the second-biggest problem it was allegedly drafted to fix!

The bottom line?

If Obama hopes to create a regulatory environment that stands for another six decades (like Glass-Steagall), he is going to have to do what Roosevelt did once upon a time. He is going to have make some bankers mad.

Fat chance in hell of that. He’s a neolib Democrat whose presidential campaign imbibed at the hog trough of bankers and financiers to the tune of opting out of public campaign financing.

We’re getting Obama’s lipstick on a pig in spades.

Update: Krugman finds further problems, above all, a failure to reform the financial ratings agencies; remember, it was the incestuous relationship between folks like Moody’s, on that side, and those like AIG and major banks on the others, that gave ridiculous ratings to jumbled-together CDOs, etc.