Failing to Police Wall Street

There’s been much debate in Congress over the Bush administration’s tepid plan to regulate financial markets, which Treasury Secretary Henry Paulson unveiled earlier this week. Many critics have argued that the plan doesn’t go far enough to rein in speculative lending by Wall Street investment banks, and will do little to prevent future financial market debacles like the housing and credit crises that are largely responsible for tipping the U.S. economy into recession this year. This view will find a receptive audience among the American public.

Let’s first consider just how negative the public has become on economic conditions in the country. In a late March Pew poll, an amazing 88 percent rate economic conditions today as “only fair” (32 percent) or “poor” (56 percent). That 88 percent figure is the highest recorded in 16 years.

Then let’s look at the public’s views of the Bush administration’s handling of the financial crisis. According to the Pew poll, an overwhelming majority of Americans (80 percent) have heard about the major problems that have been bedeviling our financial markets and involve large investment banks. What’s their rating of the administration’s job in handling these problems? You guessed it: highly negative.

Eighty percent rate the Bush administration’s performance as only fair or poor compared to just 17 percent who rate it excellent or good. The administration would be well-advised to promulgate some regulations with teeth in them if they don’t want to see this abysmal rating sink even further.