Mona Charen

The Democrats' narrative about the financial crisis of 2008 (and the justification for financial reform) goes like this: Investment bankers, typified by Goldman Sachs, manipulated markets, bamboozled investors, and in their greed, managed to bring the entire economy to its knees. The solution is more strenuous government regulation. Republicans, who are beholden to Wall Street, are blocking reform.

The Democrats excel at presenting legislative tableaux with predigested morals: Stern Democratic lawmaker grills slippery Wall Street executive. Democrats for the people; Republicans for the fat cats.

Do people really buy this anymore? Everyone I know who works on Wall Street is a Democrat. Anecdotes are not evidence, but consider this: According to the Center for Responsive Politics, Democrats received $11.3 million in contributions from hedge funds in 2008. Republicans got $5.9 million. Some critics of the Dodd bill note that it would give broad discretion to the FDIC and a new regulator to decide which firms would be bailed out and which would not. That isn't so much preventing another crisis as institutionalizing "too big to fail." The moral hazard problem -- i.e., encouraging risky practices with the implicit or explicit promise of a bailout -- remains.

Further, the Dodd bill -- and the Democrats' narrative -- completely omits the role of government in the financial debacle. Neither Fannie Mae nor Freddie Mac is mentioned in the legislation. But the incentives created by government, specifically the sustained push through law and regulation to provide mortgages to more and more uncreditworthy borrowers, created the conditions for the housing bubble and for its eventual crash. The wizards of Wall Street may have concocted exotic ways to make money by betting on the fortunes of the real estate market, but it was the politicians who first destabilized that market.

Michelle Malkin

Let's stipulate that the masters of the universe on Wall Street may deserve flaying, and sensible reform requiring more transparency and limiting leverage is well and good. But when the federal budget deficit stands at $1.5 trillion, the spectacle of congressmen and senators waxing indignant about the irresponsibility of others is a bit much.

Leaders have a responsibility to be prudent with the taxpayers' money. At least Wall Street trades are between consenting parties. But when politicians gamble with taxpayer money, it's different. We don't willingly sign on to these bets. Yet by their profligacy, elected officials are placing our financial futures at severe risk.

Mona Charen

Mona Charen is a syndicated columnist, political analyst and author of Do-Gooders: How Liberals Hurt Those They Claim to Help .
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