Huffington Magazine Issue 33 | Page 67

OBAMA 2.O / FINANCIAL REFORM it was bailed out in the crisis, in a unit that made bets against mortgage-backed securities. He got that job on the recommendation of a colleague in the Clinton administration, former Treasury Secretary Robert Rubin, one of the chief architects of market deregulation in the 1990s. Lew has said that he didn’t think deregulation led to the financial crisis, a view in line with Rubin’s laissezfaire approach. Lew’s pick signals that financial reform will take a back seat in Obama’s second term to matters of the budget. That may prove shortsighted. “If you care about the fiscal crisis, the first place to start is to make sure we prevent another financial crisis,” said Neil Barofsky, former inspector general for the Troubled Asset Relief Program, the crisis-era bailout fund. “We’re having this fiscal crisis now because of the financial crisis. If we have a $4 trillion or $5 trillion hit from another crisis, negotiations over the sequester will be nothing.” In interviews with The Huffington Post, Barofsky and other reform advocates identified at least five things that must happen in Obama’s second term to maintain the momentum for reform and HUFFINGTON 01.27.13 make another devastating crisis less likely. They agree that there is almost certainly no chance that Obama will embrace more dramatic reform ideas being advocated in some circles, including breaking up large banks or reinstating the “I think the failure to set our economy straight with regard to the financial sector could well be the blight that the president had a chance to but did not correct.” Depression-era Glass-Steagall Act separating commercial and investment banking. Even the five modest goals presented here might be too much of a stretch, they fear. But they are possible. One: First, Do No Harm Dodd-Frank is far from perfect. It does not clear up the murk of bank balance sheets, bring sanity to executive compensation or much reduce the influence of flawed credit-rating agencies. Its provisions for winding down big banks might not work. But doing away with Dodd-Frank could be much worse; even the administration’s harshest critics on the left admit it is better than nothing. Critics on the right, meanwhile,