Michelle Malkin » The fit hits the shan on Wall Street

Michelle Malkin » The fit hits the shan on Wall Street

Things look bad on Wall Street.

Secretary Paulsen had sought to get control over mortgage regulation in April, but Democrats wanted to bail out the banks.

The plan, produced by a lame-duck Republican administration facing a Democratic Congress, would drastically expand the authority of the Federal Reserve to oversee financial markets. It would consolidate federal agencies that regulate the nation’s securities and commodities futures markets. And it would allow insurance companies, which have long been regulated by the states, to choose instead to have a national charter and be supervised by a new federal agency under the Treasury Department.

Mr. Paulson said on Monday that he did not expect the bulk of the plan to be adopted during the current administration — and he said Congress should not even consider adopting most of it until after the current housing and credit crisis ended.

“Some may view these recommendations as a response to the circumstances of the day,” Mr. Paulson said. “That is not how they are intended.”

Senior lawmakers, while praising the administration for raising important points for further discussion, said the odds were long for a major overhaul before Congress all but shuts down for the elections in the fall.

“Since this is opening day in baseball, I might as well make a baseball metaphor,” said Senator Christopher J. Dodd, the Connecticut Democrat who heads the Senate Banking Committee. “This is a wild pitch. It is not even close to the strike zone.”

Mr. Dodd and Senator Harry Reid of Nevada, the majority leader, said in a telephone conference call with reporters that overhauling the regulatory structure was not a high priority. Instead, they said, they were hoping to quickly move legislation that would help homeowners facing higher mortgage rates and foreclosure.

The Democrats’ bill would provide an additional $200 million for counseling for homeowners in danger of foreclosure, would authorize $10 billion in bonding authority for housing finance agencies to refinance subprime loans, and provide $4 billion for local governments to purchase foreclosed properties.

The bill would also change the bankruptcy laws to allow judges to modify mortgages on primary homes — a provision opposed by Republicans who say it will only increase mortgage rates.

(Italics added for emphasis.)

This mess seems to indicate that the Democrats have been in deep with these folks for a while. While the mess is not the Democrats fault, the depth of the problem seems to have been made worse because the Democrats cooperated in preventing real fixes to an existing problem.

Even more interesting is the candidates' reactions. O-Bomba wants to blame Republicans for laissez-faire economics for creating the problem without regard to the history of the matter. McCain addresses the corrective action of refusing government capitalization of struggling businesses and fix the regulatory scheme that favors Congressional meddling and dawdling. I don't know what he wants to do precisely, but fewer regulatory bodies allow greater coherence in operation with fewer political interference opportunities that can be hidden from view. Those make sense to me from my personal experience in business.