Noam, again, has great reporting on how financial reform managed to temporarily suspend the political principles of physics. Here's a taste of one crucial moment:
Most lobbyists continued to believe the derivatives piece of Dodd’s bill would disappear once Senate Agriculture Committee Chairman Blanche Lincoln negotiated a compromise with her Republican counterpart, Saxby Chambliss. (The Agriculture Committee shares jurisdiction over derivatives.) What the industry hadn’t realized was that, as the White House pivoted to financial reform, derivatives were rocketing up its priority list. One reason was strategic: The White House began to recognize that derivatives might be more hospitable terrain than, say, the too-big-to-fail problem, the solution to which Republicans dishonestly dubbed a “permanent bailout.” “Rahm’s view is: ‘I like the derivatives issue,’” says one administration official. “ ‘We’re on better ground on that than talking about bailouts. If they talk bailouts, we talk derivatives.’ ”
Unbeknownst to Wall Street, the new White House focus had transformed the Dodd bill from a legislative ideal—worth striving for but unlikely to pass intact—to a minimally acceptable standard.
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