This time of year, it's common to hear the sound of bells ringing outside stores as volunteers encourage shoppers to contribute to a good cause. There is a different kind of bell ringing in the offices of financial market regulators, though, and it's an alarm bell.
In July, Congress passed the Wall Street Reform and Consumer Protection Act. When he signed the bill into law, President Barack Obama said the reforms "represent the strongest consumer financial protections in history." It's a good law. It mandates sorely needed reforms. But the alarm bell is ringing because, as of today, Congress hasn't appropriated the funds to ensure that regulators can fully carry out the law.
It's simple to describe why the reforms were necessary: "remember 2008." That was the year of "markets gone wild." It was the apogee of "let the free market roll," light-handed regulation, and Wall Street making high-wire bets on risky investment vehicles too complex to understand. Banks bet against their own customers' ability to repay mortgages with murky credit default swaps. Nobody paid much attention to the seemingly never-ending exuberance. That is, until things fell apart.
When the system fell, it fell hard. The economy reeled. Taxpayers had to hand over the cash to keep the "greed is good" actors afloat. Eight million jobs were lost and our country fell beneath a rock of a recession.
Nobody wants that to happen again. The new law goes a very long way toward preventing another money meltdown. It will shine a regulatory spotlight on $600 trillion in over-the-counter market instruments like those credit default swaps. It will crack down on those who made a one-sided casino out of markets that consumers depend on for almost everything they buy. It offers a previously defenseless public protection from sneaky, "fine print" price gouging on loans and credit cards. It will put a foot down on the Wall Street excesses that got us into the worst financial crisis since the Great Depression.
But the alarm bell is ringing. Congress left for the elections without passing a budget for the coming year and without considering the immediate need to fund the agencies it tasked to carry out its wishes. Now, powerful Wall Street lobbyists are needling Congress to effectively kill the new law by starving it to death. Memories can be short, but Congress must remember 2008 and the public's demand for reform. It passed a tough bill six months ago. Now, it needs to stare down the anti-reformers one more time and put the funding in place for the work to be done.
Congress needs to pass a budget - and soon - to bring certainty to the economy. Let's hope it hears the bells ringing.
Bart Chilton is a commissioner on the Commodity Futures Trade Commission. You can write to him at Three Lafayette Centre, 1155 21st Street NW, Washington, D.C. 20581.