Lost Her Carte Blanche, Part 2

Seeing has how she has a nasty battle to win re-election at best, Democrat Sen. Blanche Lincoln of Arkansas is now going for broke on the question of financial reform in an effort to win populist cred with voters.

Sen. Blanche Lincoln (D-AR) surprised many observers today when she announced she'd introduce legislation to tightly regulate the derivatives market, as part of a broader financial regulatory reform bill. Lincoln's one of the most conservative Democrats in the Senate, and the White House had been pressuring her not to cede too much to the GOP on the issue. In the end she not only did as they asked, she took them to task for not going far enough to regulate banks.

"Proposals that I have seen from the administration have not gone far enough to prevent bailouts of 'too big to fail institutions' and could contain loopholes," Lincoln said. "If we pass reform, it needs to be real reform. My proposal will go further than any other congressional or administration proposal to prevent future bailouts."

And, faced with a primary challenge, and a tough general election campaign, she wasted no time positioning herself as a bold opponent of Wall Street. Just hours after the news broke, her campaign manager Steve Patterson blasted out an email to supporters. "Just this afternoon, news broke about Senator Lincoln's new proposal that would drastically change the way Wall Street does business," Patterson writes. 

Amazing how Blanche has her "come to Jesus" moment only when the polls show her down by double digits to basically any of her Republican primary foes.  Still, the New Blanche is taking a very hard line on financial reform, and it's entirely possible this will motivate Ben Nelson, Evan Bayh, and even a few Republicans like Voinovich, Collins and Snowe to follow suit.

After all, the Republican tack on financial reform is that the Senate bill will enshrine a permanent taxpayer bailout culture.  Since Republicans are incapable of telling the truth, the reality is that the bill creates a fund for bailouts paid for by the banks, and that the government will have the ability to unwind a bank before it can get too big.

In other words, this is like Republicans complaining that firefighter axes used to save lives enshrine a permanent culture of property damage.  Having said that, the devil is still in the details, and while I know there's a 100% chance that any Republican reform plan will be ultimately useless, I still have about a 85% chance of anything the Dems do here with this bill of being just as worthless as far as preventing another financial meltdown.

Getting into that 15% range of actual efficacy however just took a small but important step thanks to the most unlikely of Democrats.  If there's anyone owned by corporate interests in the Donks' caucus, it's Lincoln (D-Wal-Mart).  It shows just how dire her own position is to see her go this route...