A Contrarian Victory

Ron Paul, the nominally Republican congressman from Texas, is sui generis in American politics.

After nine years during which bipartisanship utterly disappeared from our government, Rep. Paul revived it yesterday in stunning fashion.

Paul, who is more libertarian than Republican, teamed with a Democrat, Alan Grayson of Florida, to sponsor an amendment to the sweeping financial overhaul legislation that aims to regulate the industry for systemic risks.  It subjects  the Federal Reserve to greatly intensified audits and oversight. The amendment advanced on a 43-26 vote of the House Financial Services Committee with both Democratic and Republican support. The vote reflected the widespread and bipartisan populist anger at the central bank's policy decisions and secretive methods of operation.

It was also a sharp rebuke of the Obama administation's economic policies and especially of its top two financial regulators, Treasury Secretary Tim Geithner and National Economic Council director Larry Summers.

Summers and Geithner were among President Obama's very first appointments, and among his very worst.  The debate in the financial services committee gave Republicans an opening to go after Geithner's hide with particular fervor, even demanding that he be fired from the treasury post.

It stung. Geithner snapped back at them that the country's financial mess was "inherited."  What hypocrisy! Sure it was "inherited" -- from a gang of Wall Street thugs including then president of the New York Federal Reserve Timothy Geithner.

At the New York Fed he operated in the very atmosphere of clubby secrecy that the Paul-Grayson amendment will terminate.  It would allow Congress to order audits of all the Fed's lending programs as well as of its basic decisions to set monetary policy by raising or lowering interest rates.

I hope the Paul-Grayson Odd Couple keep the pressure on this administration for all of its economic policy follies.  The worst of them is what former New York Gov. Elliott Spitzer called "continuity."  He elaborated:

"They have embraced the Bush Administration view that if you solve the problem of big banks everything else flows from that. They are wrong. Too big to fail is too big. They don't get it. The only two people I know who don't appreciate that are Tim Geithner and Larry Summers. Paul Volcker, Alan Greenspan, Henry Kaufman, Mervyn King -- every major academic has said, we must get rid of too big to fail." 

Public exposure of which financial institutions get big bucks from the Fed  will put a significant dart  in Too Big to Fail.

Perhaps the Odd Couple have a few more darts in their quiver. I hope so.