Battle Over Bailouts Shifts Oversight Debate

By JOHN HARWOOD
NYT

The financial regulation debate is entering tricky new territory — for the Republicans who are losing it, for the Democrats who are winning it, and for Wall Street.

The catchiest Republican argument against the Obama administration’s regulatory initiative — that it would perpetuate big bank bailouts — was not strong enough to block Senate debate. Now, with the issue on Washington’s center stage, President Obama’s adversaries are left with issues of far greater consequence for their business allies but far less political appeal.

Democrats, who have business constituents of their own, face a different problem. The debate has swung so far toward regulation that it threatens to outstrip the intentions of the legislation’s principal authors and complicate the Obama administration’s ability to reel it back in.

For Wall Street, the debate is cresting at a particularly inopportune moment, as federal fraud charges against Goldman Sachs pour fuel on the antibailout populist brushfire. Some incumbents in both parties, delighted to see flames heading elsewhere, may keep pouring.

(More here.)