Considering actual temperatures dropped noticeably below average, the summer of 2009 compensated for the uncharacteristic chill with some incredibly heated debate over health care reform. Resulting in some fascinating (if occasionally bizarre) political expression, health care reform remains up in the air. But with President Obama looking to transition into banking reform, that inflammatory back-and-forth could suddenly expand to the global political arena.
The summer series of health-care debates and town halls saw some deep fissures develop in American political culture, characterized by everything from Obama comparisons to Stalin to a U.S. representative proposing a communal wrist-slitting. But the president’s shift to enforce stricter regulation on American banks could potentially become even more heated (although likely without the Stalin comparisons). For one thing, any debate over banks inevitably influences the global economy. And for another, we’re talking about people’s money here. And discussion can get very heated very quickly when it involves people’s money.
While the details of this proposed regulation continue to emerge, it looks to affect primarily a small number of high-profile financial players. Led by Paul Volcker, Bill Donaldson, Barney Frank, and Chris Dodd, it primarily looks for new restrictions on the size and scope of banks. The initial response to this legislation was skeptical in the financial industries, particularly when markets almost immediately saw shares fall following the Obama announcement. But President Obama will have to do more than convince his constituents to push this legislation forward.
Right after the White House announced their proposal, politicians and economists around the globe weighed in on how their markets were directly influenced. In the UK, Tory MP George Osborne voiced his intentions to mull over President Obama’s proposal at the next G20 summit. How the president would do pitching his plan to that group compared to a town hall meeting remains to be seen. In Asia, economists seemed less concerned about the proposed legislation touching their markets.
While this international dialogue could grow heated, it could also potentially cause a divide in President Obama’s own cabinet. By engaging the proposal spearheaded by Volcker, the president effectively shifted some power away from his Treasury Secretary Tim Geithner. With health care reform still very much up in the air, how the president handles all these simultaneous battles could essentially dictate the legacy of his presidency. Hopefully there won’t be any wrist-cutting counter-proposal.