Introduction and paper outline
On November the 5th 2012, the United States of America participated in one of the most closely contested elections in recent history. The elections pitted a rejuvenated Republican Party led by Mitt Romney and more reformed Democrats led by the incumbent President Barrack Obama. The election was dominated by several issues including the slow economic recovery process, immigration and a high unemployment rate among other issues. The United States went into the election a rather divided nation in terms of whether the incumbent had done more to improve the economic conditions or whether the nation should trust new ideas as Romney presented. However, the poor economic conditions that the US found itself in began way before President Obama took office. The economic crisis that plunged the entire globe into a recession began in the year 2008 with the onset of credit crunch in the US banking system. The credit crunch crisis spilt over to the rest of the big economies with the European Union being most affected. Several banks, especially investment banks, manufacturing businesses and other small enterprises had to close down. Citizens lost their jobs and homes faced foreclosures. The United States faced the worst recession since the 1929 great recession.
While the challenges that faced the country were economic in nature and required economic solutions, political solutions were also necessary. This is due to the perception that laws governing the financial sector favored the businesses and not the customers. This research paper addresses the Wall Street Reforms that were signed into law by President Obama. This paper will also review the role of the presidency in persuading congress to advance policy proposed by the president.
The first section of the research paper will address the US political system and the conflicts that are inherent in US political structures. The paper will examine the role of the President and that of Congress with regard to legislation. The research will further examine how presidents negotiate and bargain with congress in order to get the bills passed in congress.
The second part of the research paper will examine the Dodd-Frank bill and the context with which the bill was introduced in congress. The paper will further examine the key provisions of the bill and how the some of the provision were contentious. The final section will analyze steps the president and the democrats took in order to bargain for the passing of the bill in both houses of congress.
Presidency vs. Congress
The American political system was modeled in such a manner that the branches of government were, in one way or the other, interdependent (Andrade, 5). To do this, there were checks and balance incorporated in the manner in which congress and the presidency would operate. In particular, the presidency is required to propose policies and budgets while congress is mandated to implement the proposals from the president. This interdependence in the American political system inherently creates room for conflict.
Upon election into office, every president always seeks to influence policy and laws in a manner that is in tandem with the election pledges made during the campaigns. This aspiration to alter policies and laws is made apparent when a president declares the objectives and aspirations of his/her administration (Andrade, 5). However, to do this, congress will play a pivotal role in the deciding whether the country will adopt policies that the president seeks to advance.
According to America’s political construct, congress enjoys total control over budgetary spending. This implies that the president fully relies on congress to implement such policies. On the other hand, the president has the powers to veto legislation and congress needs to work with the president to avoid unnecessary tussle.
The president, in persuading congress into advancing his policies and objectives, has several tools at his disposal. One of the most common persuasion method used by president is to promise a member of congress a chance for political advancement. One such promise is to assure a member of congress the support of the president in seeking reelection. Other persuasive schemes that the president would use are to invite members of congress into the White House as well as inviting them into Air Force One. Thus the president has a raft of tools and methods that a he can employ in getting individual members into voting for presidential policies.
While the above persuasive measures may be affect individual members of congress, the president could still employ other tools of negotiations with regard to parties or caucuses. The common method applied is cooperation and compromise. The presidency, in most cases, appreciates the fact that America’s political system is highly interdependent therefore offering to compromise on some issues will give room for positive outcomes of the negotiations (Andrade, 6). Compromise therefore allows parties to settle at some middle ground without having to give up or accepting the entire policy as it is. Cooperation implies that the president and his party will accept to support the other party of caucuses in other policy issues.
Wall Street Reforms
The crisis in the US financial system created one of the greatest economic recessions since the Great Recession . President Barrack Obama publicly stated that Congress and the political leadership had a role to play in failing to safeguard American consumers. The 2008 credit crunch created much public discontent in the big banks and financial institutions. Financial excesses that led the country into the credit crunch were believed to be a result of hands-off policies adopted by previous administrations. The current administration under President Obama was adamant at introducing new policies and the guideline in the financial sector. In 2010, following long sessions of debate and agreeing to concessions, congress passed the Dodd-Frank bill allowing for sweeping reforms into the financial sector. Deregulation in the financial sector allowed banks to expand, sell loans and trade in securities without any regulation from the federal government. In imposing new regulations, the Wall Street Reforms proposed several provisions.
One of the initial provisions of the Dodd-Frank Bill was a resolution fund. The resolution fund was proposed in order to provide for an orderly liquidation process. This proposal was a response to the failure of big firms such as Lehmann Brothers that were considered to too stable to fail. The proposal was to create a $50 billion fund that would ensure an orderly liquidation of big firms in the financial sector .
This proposal faced opposition as most republicans considered the fund a bailout program. The previous financial crisis had forced the federal government to bail out key businesses especially in the auto industry. The bailout fund increase the national deficit and was indeed and economic setback. Republicans were vehemently opposed to this provision.
The other provision was the creation a council of regulators that would oversee the operations of financial institutions vis-à-vis the proposed reforms. Led by Treasury secretary, the new body would also assess risks in the financial sector as well as closing up troubled firms.
A consumer protection provision also created new consumer protection agency under the Federal Reserve. This regulatory agency would oversee operations of financial institutions and would report any misdeed to the regulatory council for action. The regulatory agency would also ensure that he products offered to the consumers are both consumer friendly.
Finally, the Volcker Rule proposed that bank should not participate in private equity sponsorship, proprietary trading and participating in the hedge fund business . This would ensure that banks do not participate in any risky businesses that put customer deposits at great risk.
Role of presidency in persuasion
Initially, most Republicans were opposed to Wall Street reforms as most of the big businesses were opposed to the proposed regulations. Either, most of those opposed to the Wall Street reforms argued that the $50 billion fund was not acceptable as it created a new bailout fund.
In April 2010, the Wall Street reforms seemed to have hit a deadlock as the republican remain opposed to the reforms. The upcoming midterm elections also provided a hinging point with regard to the policy. Therefore, the Obama Administration agreed reach out to the republicans .
One of the methods that the President Obama opted for was compromise. President Obama agreed to remove the controversial $50 billion fund and proposed by most republicans. Additionally, three Republicans agreed to vote for the reforms thereby crossing the party lines. These republicans were Massachusetts’ Scott Brown, Maine’s Susan Collins and New England’s Olympia Snowe.
Conclusion
America’s political system, in its initial construct, is rather complex. The presidency, which is the head of the executive branch of the government, is tasked with the bureaucratic process of running the country. Congress, on the other hand, legislate the laws and implements the budgetary provisions as proposed by the presidency. In the same regard, congress relies on the president sign bills into laws. Where the two interdependent units appear to be in conflict, policies, reforms and other guidelines will take longer to be implemented.
Thus in averting such longer processes and political conflicts, the presidency and congress have in the past developed ways to find middle ground. The president may advance personal favors to members of congress in order to secure support. Either the president may also call on the public to coerce their representatives in congress to allow polices to be passed.
However, the more reliable and most applied method is compromise and cooperation. The compromising, the president negotiates with congress in a way that each party agrees to lower the bar. Here, each party agrees to let go some of the stances held towards proposed policies in order to get some acceptable middle ground. Cooperation is where congress agrees to the policies presented by the president on condition that the latter agrees to a precondition set by the former. A cooperation model may also involve a Caucasus of politicians in order to be advanced a different issue all together. In all Americas political process is one made up of interdependent autonomous bodies working together towards achieving particular national goals.
Works Cited
Andrade, Lydia. "Government and Politics: United States Balance of Power Between Congress and the President." 2008. apcentral.collegeboard.com. 7 November 2012
Appelbaum, Binyamin and David Herszenhorn. Financial Overhaul Signals Shift on Deregulation. 15 July 2010. 7 Nov 2012
Henry, Ed. The Obama administration moved late Friday night to jump-start negotiations on Wall Street reform. 17 April 2010. 7 Nov 2012
Savage, Charlie. Takeover: The Return of the Imperial Presidency and the Subversion of American Democracy. Boston: Little, Brown and Company,, 2007.
