Frank Rich on Wall Street Reform, or not

NYT's Frank Rich:

The Obama administration does not seem to understand that this rage, left unaddressed, could consume it. It has pushed aside the entreaties of many — including Paul Volcker, the chairman of the White House’s own Economic Recovery Advisory Board — to break up too-big-to-fail banks. Those behemoths, cushioned by the government’s bailouts, low-interest loans and guarantees, are back making bets that put the entire system at risk. Yet last Sunday, we once again heard the Treasury secretary, Timothy Geithner, on “Meet the Press” dodging questions about the banks in general and Goldman in particular with unpersuasive bromides. “We’re not going to let the system go back to the way it was,” he said.

Surely he jests. On Monday morning, a business-savvy Democratic senator, Maria Cantwell of Washington, publicly questioned Geithner’s fitness for his job, given his support of loopholes in proposed regulations of the derivatives that enabled last year’s collapse. On Tuesday, Congressional Democrats, with the White House’s consent, voted to gut the Sarbanes-Oxley Act, the post Enron-WorldCom law passed in 2002 to prevent corporate accounting tricks and fraud. Arthur Levitt, the former Securities and Exchange Commission chairman, told me on Friday it was “surreal” that Democrats were now achieving the long-held Republican goal of smashing “the golden chalice” of reform. If investors cannot have transparency, Levitt said, “the whole system is worthless.”

The system is going back to the way it was with a vengeance, against a backdrop of despair.