Chris Dodd's scolding of the Obama administration on Tuesday for wanting to do "too much" to restore banking regulation sent me into a short trance and a vision of the future: Dodd as banking lobbyist.
Here's the Dodd quote if you don't believe it: "I don't want to be in a position where we end up doing nothing because we tried to do too much."
It's an outlandish supposition, one may say, to have the chairman of the esteemed Senate Banking Committee step out of public office (he's retiring) and make a beeline into the very banking industry he's supposed to be helping regulate. But it's not that outlandish, especially if you recall how Phil Gramm, a former chairman of the esteemed Senate Banking Committee, left office in December 2002 while the ink was still drying on an announcement that he had accepted an executive job at UBS (the man had a lifestyle to maintain). He left government, perhaps, because his work was done, having repealed the Glass-Steagal Act of 1933 with the Gramm-Leach-Biley Act of 1999.
Glass-Stegall, as we all know by now, segregated investment banking and commercial banking as a way of helping maintain finance-industry stability and mitigate the too-big-and-too-networked-to-fail problem that set off the current economic crisis. It is back in the news in a big way this week because Paul Volcker has suddenly become the go-to guru in the White House on the question of how to quell the populist furor over the economy/Wall Street/banker compensation/unemployment and so on. Volcker has an op-ed piece in the NY Times on Saturday in which he laid it all out. For studious readers, the WSJ today includes a transcript of his prepared testimony to the Senate Banking Committee, where he expands some on the topic.
The so-called Volcker Rule - aimed at curbing banks' conflicts of interest -- is also helpfully summarized in today's Times, which boils it down to two points: "One would ban banks that use federal deposit insurance and the Federal Reserve's discount window from engaging in proprietary trading - making market bets using their own money. They also would not be able to own hedge funds and private equity funds. The other would seek to bar further consolidation among financial institutions by capping the future size of any firm."
Note that Volcker's approach has only recently been embraced by the White House, and that critics say that's only because Obama is suddenly pandering to populist impulses. Dodd himself said it "seemed to many to be transparently political."
But what in Washington isn't political - and who cares if it's "transparently" politicial?
One more question: Who is Dodd afraid of offending here -- his prospective post-public-service employers?