The Proof Is In, No Pudding

Cool heads on Capitol Hill haven't been able to prevail over the rampaging recidivism of warmongering and outright theft from working citizens' pockets. Among those remaining cool, and remaining defensive of our economic health, is Rep. Barney Frank, chairman of the House Financial Services Committee, who has an article in today's Financial Times. He is ready to go back to work this week to pull this country out of the destruction it's had wreaked on it during the past 7+ years. He has a fight ahead of him.

As we prepare for this autumn's election, the results are in on America's 30-year experiment with radical economic deregulation. Income inequality has risen to levels not seen since the 1920s and the collapse of the unregulated portion of the mortgage and secondary markets threatens the health of the overall economy.
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Conservatives have long argued that government efforts to address these issues would damage the economy. They are, of course, the same people who predicted that there would be an economic disaster after Bill Clinton and the Democratic Congress raised marginal tax rates in 1993, and who opposed other tax increases on upper-income people. Economic growth in the ensuing years was among the strongest in the postwar era. It is now clear that growth in the private sector is consistent with a far greater variation in many aspects of public policy - including taxation and regulation - than conservatives claim. In fact, appropriate intervention with respect to prudential market regulation is necessary to promote growth, and its absence - as we have learned - can retard it.
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In 1994 a Democratic Congress - the last before the Republican takeover marked the arrival of the deregulators - passed the homeowners equity protection act, giving the Federal Reserve the power to regulate all home mortgage loans. The avatar of deregulation, Alan Greenspan, then Fed chairman, flatly refused to use any of that authority.

In contrast, today's Fed will soon issue rules using that authority. That represents a significant repudiation of the previous view.

The severe damage done to the country, but most of all to the working people, can't be ignored even by those who continually put corporate interests ahead of public interests. The whole economy, worldwide, has been recklessly put at risk.

It is going to be a hard time this coming term of Congress, and we need to give a lot of support to those who are trying to keep the country afloat. Hooray for Barney Frank, at http://www.house.gov/frank/contact.html or (202) 225-5931.