You know it is the case that our economy over the last several decades has been in a process of transformation that will be, you know, familiar to many listeners -- from being driven by manufacturing activity to being driven by financing activity. Our government has made a number of decisions that privilege financial activity through lower tax rates, through the ease of borrowing, through encouraging investors to put their money into the American marketplace. And the effect of that has been in some cases as direct as transforming the business model of given companies from manufacturing widgets in Idaho to manufacturing those widgets in China. And the company that is still in Idaho now is in the business of financing the sale of those widgets to American customers. So you've had a transformation where we've stopped making things and started financing the making of those same things in other countries. And what you've seen is a growth in the financial sector to the point where at the high point before the crisis, I believe 43% of corporate profits in America were in the financial industry. And that's kind of an astonishing number if you recall that financing is supposed to be an intermediation. It's supposed to be sort of the role of middlemen in the economy. Facilitating the movement of money from one place to the other has now become 43% of our economic activity. ...Binyamin Appelbaum, NYT financial reporter
In an interview with Terry Gross, Appelbaum laid open the new financial reform bill and what it will to for all of us. Maybe not so much. Gross asked him what happens to reform if a Republican president is elected in 2012.
TG: So its possible that Obama won't be reelected and there will be a Republican president in place by the time a lot of the regulations written by the new regulatory agencies are put into effect. And it's possible that a Republican president would put into regulatory agencies people who are ideologically opposed to regulation. It wouldn't be the first time! Thus kind of toning down the kind of regulations that were supposed to be put into effect? I mean, is that a risk that the Obama administration is taking with this approach to regulation?
BA: Absolutely. Administration officials describe it as a necessary risk. They say this is how the system works. Congress was never going to write 100,000 pages of financial regulations. The bill is already unbelievably long. But the administration does view the end of the first term as a real deadline and they're very determined to implement as much of this as they can before that deadline. The other power that they have is the power to appoint the heads of these agencies -- people who in many cases will have terms that outlast this first presidential term. For example, the head of the new Consumer Bureau -- it's a five-year term. That shapes up as a critical appointment for the president. It will really set the tone for how this new agency moves out into the world and what issues it decides to focus on. And that person will have five years to make those decisions before any subsequent president can put their own stamp on that agency.
More on the who gets reformed and who gets protected in the Wall Street Reform and Consumer Protection Act here.
