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The Court Party’s Deference to Monied Interests

Meanwhile, Republican officeholders who want to explain why they acted to prevent the collapse of the U.S. banking system can get no hearing from voters seized with certainty that a bank collapse would have done no harm to ordinary people. Support for TARP has become a career-ender for Republican incumbents, and we shall see what […]

Meanwhile, Republican officeholders who want to explain why they acted to prevent the collapse of the U.S. banking system can get no hearing from voters seized with certainty that a bank collapse would have done no harm to ordinary people. Support for TARP has become a career-ender for Republican incumbents, and we shall see what it does to Mitt Romney, the one national Republican figure who still defends TARP.

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Whatever the reason, the intellectual right accords a deference to the wants and wishes of the financial industry that is seldom accorded to agriculture, manufacturing, transport or retailing.

But it’s not always true that what’s good for Goldman Sachs is good for the economy, or vice versa. Nor is what “the markets” want the same as what free-market economics require. Finance plays with other people’s money: financial disasters damage people and businesses who never participated in the fatal transaction. For that reason, financial firms are justly regulated in ways that other firms are not. And yet nearly 80 years after the creation of the Securities and Exchange Commission, influential conservatives — including The Wall Street Journal editorial board — argued that trillions of dollars of derivatives trading should be exempt from regulation. ~David Frum

In other words, deferring to the interests of the financial sector is an intellectual disgrace and a compromise of free market principles, but shamelessly throwing public money at financial institutions as part of an unaccountable, outrageous power-grab by the executive was an important and necessary thing to do. I’m glad we sorted that out.

Many influential conservatives, including The Wall Street Journal editorial board, also argued for appropriating hundreds of billions of dollars to purchase toxic assets that were never purchased to prevent the collapse of the banking system that wasn’t actually in danger of collapse. This has since been hailed as a great victory and a triumph of wise policymaking, when it was even more true in September and October 2008 that “what “the markets” want the same as what free-market economics require.” There was broad Republican support in Congress for the TARP partly because “the intellectual right accords a deference to the wants and wishes of the financial industry that is seldom accorded to agriculture, manufacturing, transport or retailing.” Granted, it isn’t just the intellectual right that accords deference to these wishes. Republican leaders have made a point for the last two years to defer to those wishes as much as they possibly can. The problem in this case is not a failure to learn lessons, but the corruption that follows from actively supporting collusion between government and financial interests.

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