Anchorage Daily News: EDITORIAL: Next steps?

As the nation still struggles to recover from the worst economic meltdown since the Great Depression, one thing that is missing is a sense of urgency about preventing a repeat disaster. Given the populist outrage over trillion-dollar bailouts, you'd think Congress would quickly work out new rules of the road to prevent the next catastrophic financial pileup.

Instead, Washington, D.C., has a serious case of the slows. (See Monday's Daily News editorial.)

Congress only recently established a bipartisan financial reform commission, which is just starting work and won't report until December 2010. It could easily become an excuse to do nothing until then.

Alaska's congressional delegation has no one on any of the key financial reform committees, so all three members are in wait-and-see mode.

Sen. Murkowski's view

Asked by the Daily News for brief e-mail statements on financial reform, Sen. Lisa Murkowski and Rep. Don Young seem most concerned about an overreaction that could lead to over-regulation.

"We need to make sure that banks are operating in a safe and sound manner," Murkowski said. "... However, we must also guard against over regulation that could unnecessarily stifle capital formation and innovation, thereby slowing economic growth and job creation."

Expressing concern about potential "unintended consequences," she said, "We need to ensure that the abuses we saw with the largest financial institutions are addressed while at the same time making sure that the reforms don't push the smaller community banks out of business. They weren't the bad actors."

Rep. Young's view

Rep. Don Young expressed similar concerns in his brief statement:

"We must be cautious. In this 'rush to regulation,' Congress may in fact make doing business more costly, further tighten credit markets and hurt the very people that it is trying to help."

"We should first find out why our existing regulations failed and if it was an enforcement issue. ... Overall, I believe that all regulations should be limited and focused so as not to overly interfere with market forces."

Sen. Begich's view

Sen. Mark Begich, lone Democrat in the delegation, sounds more eager for change. His e-mail read:

"The international recession we're currently suffering from was due, at least in part, to financial regulators either being asleep at the switch or regulations that were too lax to apply to these on-the-edge financial instruments and over-leveraging."

Begich also warned that "over-leveraged banks are a major catalyst of the credit crunch and mortgage crisis" and he wants to see Congress make sure banks are required to keep more responsible reserves. He said he supports the compensation caps that were tied to the government's bailout aid.

As Congress muddles along, the financial underpinnings of the nation's economy are rapidly being rebuilt. It's as if, after the great fire of 1871 leveled Chicago, the city fathers dithered about passing a new fire code while a whole new city of dangerous wooden buildings sprouted back to life.

If Washington, D.C., waits too long to act, we may find the nation locked onto a path that leads to another painful economic crisis and another round of mind-boggling bailouts.

BOTTOM LINE: Where is the sense of urgency about reining in potentially catastrophic future abuses in the nation's financial system? The Alaska delegation's e-mail statements on financial reform can be found on the Inside Opinion blog, adn.com/insideopinion.

# # #

By:  Originally published in the Anchorage Daily News on September 21, 2009
Source: Murkowski, Begich, Young speak on potential financial reform