Times Glad 'Wide-Eyed Admiration' for Wall Street Is Over

In Friday's lead, Binyamin Appelbaum and David Herszenhorn welcome re-regulation by Congress over financial markets: "The government watched and did nothing as the bulk of financial activity moved into a parallel universe of private investment funds, unregulated lenders and black markets like derivatives trading."

Friday's lead story by Binyamin Appelbaum and David Herszenhorn on the wide-ranging, extremely vague financial regulation bill passed by Congress, clearly sided with those in favor of massive regulation of the financial markets: "Congress Passes Major Overhaul Of Finance Rules - Senate Vote Is 60 To 39 - Law to Reverse Decades of Deregulation - Obama Victory." Taking sides, the reporters clearly see the legislation as a welcome attempt to stop the kind of global meltdown suffered in late 2008, due to "financial excesses" and deregulatory fervor.

Congress approved a sweeping expansion of federal financial regulation on Thursday, reflecting a renewed mistrust of financial markets after decades in which Washington stood back from Wall Street with wide-eyed admiration.

The bill, heavily promoted by President Obama and Congressional Democrats as a response to the 2008 financial crisis, cleared the Senate by a vote of 60 to 39, largely along party lines, after weeks of wrangling that allowed Democrats to pick up the three Republican votes to ensure passage.

The vote was the culmination of nearly two years of fierce lobbying and intense debate over the appropriate response to the financial excesses that dragged the nation into the worst recession since the Great Depression.

The result is a catalog of repairs and additions to the rusted infrastructure of a regulatory system that has failed to keep up with the expanding scope and complexity of modern finance.


Over the last half-century, as traders and lenders increasingly drove the nation's economic growth, politicians of both parties scrambled to get out of the way, passing a series of landmark bills that allowed financial companies to become larger, less transparent and more profitable.

Usury laws were set aside. Banks were allowed to expand across state lines, sell insurance, trade securities. The government watched and did nothing as the bulk of financial activity moved into a parallel universe of private investment funds, unregulated lenders and black markets like derivatives trading.

That era of hands-off optimism was gaveled to an end on Thursday as the Senate gave final approval to a bill that reasserts the importance of federal supervision of financial transactions.

"Black markets" is a slanted term (signifying over-the-counter markets as opposed to more closely regulated financial clearinghouses) with its aspersions of corruption and conspiracy. Later in the piece there are at least quotes around the Democratic-friendly phrase:

The bill expands federal banking and securities regulation from its focus on banks and public markets, subjecting a wider range of financial companies to government oversight, and imposing regulation for the first time on "black markets" like the enormous trade in credit derivatives.

This part sounded ominously vague, though the Times didn't seem to find it that way:

The legislation is painted in broad strokes, so like actors handed a script, those regulators have broad leeway to shape its meaning and its impact.

The government-backed housing finance giants Fannie Mae and Freddie Mac didn't appear in the article, even while their main defenders, Democratic senators Barney Frank and Chris Dodd (who called them "fundamentally strong" in June 2008) were quoted in triumph. That's because Fannie Mae and Freddie Mac are missing from this celebrated re-regulation, even though they've cost taxpayers $160 billion in mortgage losses so far.

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