Cleaning up Wall Street

Tuesday, May 25, 2010 | 2:01 a.m.

Last week the Senate passed a financial reform bill designed to rein in some of the fast-and-loose practices on Wall Street that helped lead to the nation’s current recession.

The House previously passed a version of the bill, but the Senate lagged behind as Republicans used parliamentary maneuvers to block progress. The stalemate was broken when four Republican senators broke from their caucus to vote to allow the legislation to come to the floor for a debate. The legislation eventually passed and now has to be reconciled with the House version of the bill before it can be approved.

It is notable that Republicans continue to raise a fuss about the legislation. In keeping with their campaign-year theme, they argue that it represents an expansion of government power that would hurt the country. For example, Sen. John Ensign of Nevada complained about what he said was the “overreaching arm of government.” Sens. Judd Gregg of New Hampshire and David Vitter of Louisiana took shots at a provision in the legislation that would create an agency to protect consumers. Gregg claimed the agency would mandate lenders give money to people who don’t qualify for loans, and Vitter said it would be a “superbureaucracy.”

But those comments are merely meant to inspire the Tea Party crowd, which has railed against anything it sees as a government “takeover.” The comments are also disingenuous. There is no government takeover. Nor is there some “superbureaucracy” in the works to manipulate the way financial institutions lend money. The legislation in Congress would help protect investors and taxpayers from the egregious actions of financial firms, which — as the nation learned — can be calamitous to the economy. The Republicans might remember that millions of Americans were badly burned.

President Barack Obama said the goal of the legislation is “not to punish the banks, but to protect the larger economy and the American people from the kind of upheavals that we’ve seen in the past few years.”

Apparently, the Republicans don’t care how Americans have been hurt. Instead, they are upset about needed regulation, showing that they would rather protect the same players who contributed to the economic crisis — the big Wall Street firms and banks — instead of the public.

Republicans have misplaced their disgust. While they are upset at regulation, Americans are calling for it.

People are disgusted that taxpayers had to bail out the “too big to fail” financial institutions that were in ruin because these corporations gambled in the markets and lost.

Senate Majority Leader Harry Reid of Nevada understands this. He pushed the legislation, which he said would send a strong message to the big investment firms. “To Wall Street, it says no longer can you recklessly gamble away other people’s money,” he said. “It says to those who game the system: The game is over.”

That is good news. We hope lawmakers can move forward quickly to finish work on the bill to boost regulation on Wall Street and protect the American people.