James Pethokoukis writes today that Congress shares some of the blame for the financial crisis. His bill of particulars, taken from a paper by Ross Levine of Brown University, includes poor regulation of (a) ratings agencies, (b) credit default swaps, (c) investment banks, and (d) Fannie Mae and Freddie Mac. This has become a steady drumbeat over the past few weeks: sure, Wall Street screwed up, but federal regulation of the industry sucked too. So how can we trust these clowns to do the job right this time?
If conservatives hadn't waited until now to make this argument, I might think it was one of those brilliant Rovian strategies, going straight after your opponents' strong point and then turning it around on them. You liberals say that Congress was a slave to Wall Street interests? You're right! So there's no point in letting them pretend to regulate Wall Street yet again.
But now? This long after the regulation train has left the station, this argument sounds so dumb it barely even needs rebutting. Is the point truly to pretend that no regulation will work? Or that the current proposed regs are actually favors to Wall Street? (A few people have tried to suggest exactly that.) Or to goad Democrats into beefing up their bill so much that it has no chance of passing? Or what? The fact that Republicans and Democrats both bought into the deregulatory fervor of the past three decades doesn't mean they can't both unbuy into it if they work up the gumption. And while nothing lasts forever, a decent set of finance regs will improve things for a few decades anyway. If the point of this particular critique were truly to lobby for tighter regs, it would be great. As it is, it's just juvenile.
UPDATE: Mike Konczal has a more sophisticated take on this game of three card monte here.