Financial regulation shaping up as a political battleground

The Obama administration is under pressure to shore up financial firms and ensure the crisis isn't repeated. Many Republicans, though, believe regulation is the problem.
By Peter G. Gosselin
LA Times

February 3, 2009

Reporting from Washington — Lost amid last week's bad economic news, an unexpectedly partisan vote on the stimulus and President Obama's saber-rattling over Wall Street bonuses were the opening shots of a battle over how far Washington should go to reshape the financial system.

But the clash won't remain in the shadows for long.

The administration is under mounting pressure to deploy hundreds of billions -- perhaps trillions -- of new dollars to shore up financial firms into which the government has already poured a fortune. Analysts say the only way to make such a politically unpopular step palatable is for the new president to explain what he'll do to ensure the problem never happens again.

That means a return to the kind of regulatory system that Wall Street and economic conservatives fought to dismantle going back to Ronald Reagan's presidency and continuing through that of George W. Bush -- or something even more stringent.

(More here.)