The Politics Of Causality

Barry Ritholz argues that the Obama administration's failure to forge ahead with true reform of the financial system has resulted in the current health care debate disaster.

This was a colossal blunder. Passing reform legislation successfully would have fulfilled the campaign promise of “Change;” it would have created legislative momentum. It could have provided a healthy outlet for the Tea Party anger and the raucous Town Hall meetings. It might have even led to a “throw the Bums out” attitude in the mid-term elections, forcing the most radical de-regulators from office.

Also wasted: The enormous anti-Bush attitude throughout the country that swept team Obama into office. He should have been “Hooverized,” and O should have tapped into that same wave to force the greatest set of Wall Street and Banking regulatory reforms seen since the 1930s.

Instead, we have a White House that appears adrift, and the most importantly, may very well have missed the best chance to clean up Wall Street in five generations.

Never waste a crisis, indeed . . .

Ritholz is absolutely right here. Obama's financial team has been his largest failure so far, and a real raft of reforms would have completely disarmed the legitimacy of both the Republican Party and the teabagger idiocy.

Instead, Obama is rightly being painted as a corporate pawn. He has done precisely nothing in the actual financial sector reform department, and the resulting plan has only led to the forced consolidation of the industry, literally making the large "Too big to fail" megabanks even larger at the expense of competition and customers.

The populist moment is now being used against the Democrats, and for good reason. That's the lesson the Obama administration should be learning.