One of the many huge bills pending before Congress right now is the financial system overhaul. This is a big complicated mess of a proposal that a lot of people are very skeptical about, and for a good reason – it’s very hard to understand. I’ve been slow to write about it because I was about as confused as anyone when I saw the big chart supposedly explaining it. That’s a pity because now that some of the details have sunk in it looks like it’s not too bad overall. It’s only missing that one thing that Democracy demands – clarity. I happen to believe it’s not as hard to do that as it seems.
While the Obama administration hasn’t openly talked about restructuring, this bill along with health care reform and a commitment to alternative energy do go some distance towards accomplishing it. That makes this a very important discussion to have at this time. It’s essential that people understand what’s going on so that they have reason to have faith in whatever system comes out of this. The message has to be clear and straight up – we are doing things differently.
How can we make that message clear out of this mess? By simply reorganizing what’s there along clear lines that we can all understand – the separation of powers. It’s there, in this mess, and while I’d love to lay it out for you I can’t quite do it yet. But this is what I think should be done with the proposal by someone with a deeper understanding of it than I have.
Executive Government starts with the ability to make decisions. Our Founding Fathers understood this, which is why they created an Executive branch of government. In the system of financial regulation, this starts with the Treasury Department and includes all the agencies that it has sway over – including the FDIC and whatever other agencies have to move fast at times to close bad banks or enforce regulations. A good hunk of this proposed overhaul is clearly executive in nature, and that belongs with the Treasury.
Judicial The Supreme Court is necessarily above the political fray, acting solely as the interpreter of the Constitution. The Federal Reserve is beholden to the economy and not too much else. Independence is a good thing when you need it, but the scope of the power granted has to be carefully defined. What we see does do that, I think, but I’d like it more carefully explained in terms that describe how they rule. I’m wary of the Fed at times, as I think any thinking person should be. But we can describe how they interpret the economic tea leaves in a way that makes sense.
Legislative Congress is the legislative body in our government, and ultimately is responsible for the legislation that shapes and propels it all forward. That can’t change, nor should it. One of the things that keeps cropping up as Congress grills the administration about this proposal is that they don’t know exactly what their role will be. Usually, I’d chalk that up to grandstanding by an egotistical Congress, but I think they have a point here. Any good separation of powers that works will have to involve them, period. That needs to be clarified.
It may seem strange to describe a system of financial regulation like our government, but I think it’s essential. The concept of separation of powers is a mythology unto itself, a rich concept that any of us who sat through High School civics can understand intuitively. That’s important to a Democratic people if for no other reason than the success of the system depends on our faith in it.
My advice to the officials on both sides trying to slog through this debate is simple: Go back to the drawing board with everything you have and start over with first principles. Give us clear lines of authority and well defined limits. Set up to be dynamic and respond to whatever we can see might come next. I think it’s in there, if you squint sideways a little, but Democracy is something that’s much better staring you in the face.