Planning to prevent a plan

The Bushist Treasury Department wants to prevent additional regulation of the financial markets. This is known as the failure to learn from experience. No surprise there.

[T]hat authority would be limited, doing virtually nothing to regulate the many new financial products whose unwise use has been a culprit in the current financial crisis.

In other words, bailouts are fine, but nothing preventive.

In a draft of a speech to be delivered Monday, [Henry Paulson] declares: “I do not believe it is fair or accurate to blame our regulatory structure for the current turmoil.”

After all, the regulators all took early retirement. How could they have caused the credit meltdown?

Democrats reacted with some praise. “It’s a recognition, maybe a reluctant one, that you have to enhance regulation,” said Rep. Barney Frank, a Massachusetts Democrat who is chairman of the House Financial Services committee.

Do I hear the sound of faint damning?

Consolidating regulation into fewer agencies, while in the abstract a good idea, accomplishes this for Republicans: Fewer regulators to subvert. Putting more power in the quasi-independent Fed also reduces the leverage future, truly Democratic Congresses might have on regulation.

Update: Paul Krugman agrees.

Listening in Washington?

Washington chose to let financial institutions hide their risks. Though it may have started with Republicans, the Democrats joined in enthusiastically as their one year of economics at Harvard or wherever led them to pay obeisance to the free, unregulated market as bringer of all good things.

Now, not so much. I hope we're not driving off a cliff, but I think we've already driven off (how high a cliff?), and we just have a little time for agonizing reappraisal of coulda, woulda, shoulda before the impact at the bottom.

What was in it for the Democrats anyway? Campaign contributions, the mother's milk of American politics, at the cost of one of their defining values, social class.