Is there a problem with the current state of Washington’s regulation of the financial services industry? Important people on television on Sunday seemed to agree that the current relationship between commerce and government is far from ideal, considering we live in a representative democracy. Our president did 60 Minutes on Sunday, and before that, Senator Lindsey Graham said some interesting things on Meet the Press. Perhaps unsurprisingly, party affiliations colored the metaphors and reference points that our politicians used to talk about the world we live in, especially Senator Graham’s.
Consider with us, for a moment, the two very different perspectives on finance and governance that we learned on Sunday talk — that quickly-eroding bastion of reliability in televised news.
Starting with Meet the Press, because it airs first, we learned from Republican Senator Lindsey Graham that the Consumer Financial Protection Bureau is like “something out of a Stalinist era.” Graham’s use of the indefinite pronoun here is nothing if not an indication of how flippantly Senator Graham will compare things to dictatorships; there was but one Stalinist era and it ended in 1953, when Joseph Stalin died.
Also, about 10 million people died under Stalin’s rule. Between famines caused by collectivization, political imprisonment, executions, and forced labor, Stalin was responsible for more Russians’ deaths than there are people in Graham’s home state of South Carolina. A great deal of these deaths can be attributed to the famines caused by pushing the economy towards heavy industry, through his infamous Five Year Plans.
And perhaps that was Senator Graham’s point of reference for comparing the CFPB, a federal agency that aims to help American consumers deal with the banking industry, to something from one of the most brutal dictatorships in history. To some politicians, the spectrum of acceptable regulation on the financial industry is incredibly short; one can easily imagine Sen. Graham comparing the USDA to something out of Pol Pot’s Cambodia, or the FDA to Caligula. The road from consumer protection to dictatorship is, in Senator Graham’s mind, a hop, skip, and a jump long.
Later in the day on 60 Minutes, President Obama sat down with CBS’ Steve Kroft for a chat. This would reveal a radically different outlook on the relationship between Washington and the finance industry, and Stalin wouldn’t like it much.
Asked why there have been no prosecutions of those responsible for our financial collapse in 2008, Obama pointed out that the Justice Department is responsible for prosecutions, and his role is supposed to be separated from theirs to protect people against politically-motivated prosecutions. (If you’d care to know how Stalin felt about the need for this separation of powers, ask Leon Trotsky).
“Some of the most damaging behavior on Wall Street, in some cases some of the least ethical behavior on Wall Street, wasn’t illegal. That’s exactly why we had to change the laws,” the President said, referring to the Dodd-Frank Act, which created the CFPB.
Were we living in a Stalinist dictatorship, perhaps Obama would have used the state apparatus to publicly punish a banker in a show trial, or maybe he would have quietly rounded them up and shipped them off to Siberia to a forced labor camp (or, more appropriately, to lay some high-speed rail tracks in Ohio). Instead, many of them still have their high-paying jobs, and Obama has merely helped create some safeguards to prevent another crisis like the last one from happening.
When a system allows private sector workers to make millions of dollars off of taxpayer dollars, in secret, and doesn’t manage to get one collar out of a complete collapse of the global economy, how is it that elected officials get away with comparing it to Stalinism? In the same interview with CBS, Obama bemoaned the fact that we can’t have a serious discussion about economic policy anymore in Washington. We don’t wonder why.