Word is that Congress won’t really begin considering these reforms until the end of summer or the beginning of fall. That means they’re not likely to come to the floor until the end of the year or quite near it. That means banks and other affected companies will have months to organize against the provisions they consider most onerous. That means the economy will have time to grow a bit, and the terror following Lehman’s collapse will have receded from our memories, and the financial sector and the politicians who protect it will be able to argue against shackling a growing economy with new regulations without being laughed out of the Congress.
So the solution is to… shackle it with new regulations before it starts growing again. I don’t mean to be glib, because there’s a legitimate point in there about politics and timing, but the reason these groups will be able to make that argument is that, you know, there’s sort of something to it. I think we can safely say that all the relevant players are sufficiently chastened at the moment that regulation designed to curb excessive risk-taking isn’t going to provide a whole lot of benefit over the next six months, so doing a rush job gets you a suboptimal set of rules hitting when they’re least needed and most likely to have a near-term deleterious effect. I’d want to be fairly sure about having the politics gamed out right before urging a legislative blitz.
Also, much as I share Ezra’s cynicism about interest group politics, this is self-evidently a fairly undemocratic way to approach policy. “Quick, push it through before anyone has time to notice what we’re doing!” What are the criteria for determining when this is an acceptable approach to major legislation? When it’s a good bill designed by smart people?