Even though the President should have been able to claim some political credit for the financial regulation legislation (regardless of its ultimately efficacy), defeat was once again snatched from the jaws of victory. The White House became embroiled in the USDA’s firing of Shirley Sherrod, losing control of the news cycle. As WaPo noted:
Remember that old adage that the secretary of agriculture is meant to be seen but not heard? (You know that one, right?).Tom Vilsack broke that rule this week with his dismissal of, doubling down on dismissal of, apology to and attempted rehiring of (it reads like the 12 stages of grief) a midlevel Department of Agriculture employee named Shirley Sherrod.
Ah the drama! This is precisely the kind of story the media likes—oh those “teachable moments”–and so much time to reflect on “what has happened to the news,” the evils of Glenn Beck, the possibilities for a national dialog on race…..zzzzzz.
Administration embarrassment and amateurishness aside, the story drew attention away from FinReg, one of the two key achievements of the Obama administration thus far. The news cycle on July 21st focused on FinReg. The next day, Vilsack’s firing of Sherrod and the ongoing saga quickly displaced it (as seen by these story counts from Google).
As the White House is finding it difficult to extract much in the way of political gold out of FinReg, we are beginning to witness the slow drip of “unintended consequences” stories. Daniel Indiviglio (the Atlantic) provides one example with rating agency liability:
Only a few days old, the financial reform bill is already making trouble for the markets. One new provision holds credit rating agencies liable for their ratings. Scared about future lawsuits, the agencies have forbidden issuers from putting their ratings in official bond offering documents this week, which shut down the asset-backed securities market.
At 2,315 pages—likely all of which have never been read by a single human being—we can assume that the unintended consequences will continue for some time to come.
Have a great weekend!