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Financial Reform Advocates Not Keeping It Simple, Losing Spin War To Bank Lobbyists

Chris Dodd has gone back to the well looking for a Republican partner on financial reform, tapping Sen. Bob Corker (R-TN) for negotiations in the hope that something could be worked out that could pass the Senate. Corker is amendable to a Consumer Financial Protection Agency as long as it’s “appropriate consumer protection, but not the long reach of federal government arms into areas that are unnecessary,” he said.

So, maybe something gets salvaged here and maybe it doesn’t. But clearly, the finance lobby has taken control of the spin war on health care, and the constant appeals to bipartisanship and complexity of the message from those trying to get a bill across has almost totally blunted what should have been a powerful sword for the midterms in the fall.

For weeks, if not months, it’s grown increasingly clear that Republicans have been unwilling to jump on board a reform package that involves more regulatory oversight. Not a single Republican in the House voted for that chamber’s legislation. A massive lobbying effort by the banks combined with the election of Scott Brown (R-Mass.) to the Senate — depriving Democrats of the potential 60th vote needed to break a parliamentary logjam — made matters even worse. But at a time when the situation is growing more dire, Democratic party officials are worried that there is not enough momentum to generate a compelling campaign to pass regulatory reform.

“Everyone has been so focused on health care that few have focused on financial reform,” acknowledged Stan Greenberg, a prominent Democratic pollster.

“I share the concerns [about the bill being poorly defined],” Sen. Sherrod Brown (D-Ohio) told the Huffington Post in an interview last week. “I think that we’ve got to figure a way… I don’t know if the Republicans will ever vote for a good bill. I think that [Senate Minority Leader Mitch] McConnell wants Republicans in the [Banking] Committee to stop anything from happening unless it’s what the banks want. And I come down on wanting to force them, put a good bill on the floor and force them to vote yes or no, whether they can wean themselves from their corporate backers or not.”

But that’s not what’s happening. There’s this continual grasp to pass something, anything, salted by the occasional calling out of the bank lobby. What has not been done, not to any real degree, is any effort to stake out an idea – one simple, compelling idea – and use it as a cudgel for months upon months.

That’s what we’re seeing in Britain right now. The video to your right comes from the folks at Robin Hood Tax, touting a very simple and accessible tax on financial firms doing business with one another to pay for public services, anti-poverty programs and climate change mitigation efforts. In fact, I over-wrote that. Here’s their one-line statement:

A tiny tax on bankers that would give billions to tackle poverty and climate change, here and abroad.

In this very funny video, comic Bill Nighy is a banker who wants to dismiss the Robin Hood Tax as something very complex and unworkable. But through a series of questions, we learn that it’s not. It’s a 0.05% tax on transactions between financial institutions that could raise hundreds of billions of dollars. And Nighy eventually has to come around to say that it would work. The entire point of the video is to destroy the spin by focusing on the essential simplicity of the tax.

And it’s working.

Prime Minister Gordon Brown has said major economies are close to agreeing a global bank tax and hinted a deal could be reached at a G20 summit in June, in an interview published on Thursday.

“I’m interested in the way support is building up for international action,” he told the Financial Times.

Is the bank tax to which Brown is referring exactly the same as the Robin Hood Tax? Possibly not; world opinion seemed to move when Barack Obama announced his “Financial Crisis Responsibility Fee” to recoup TARP losses from the biggest banks. The point is that a simple bank tax, which everyone could understand, shifted the conversation. And that’s exactly what leading Democrats AREN’T doing with financial reform.

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David Dayen

David Dayen