Whither financial regulation?

Last week the Senate approved an overhaul of financial regulation.  The bill had to be designed so that it would receive 60 votes, which means that it contains many features that have little to do with the root causes of the 2008 financial meltdown and much to do with the pet causes of individual Senators.  The Senate bill calls for regulation of the credit rating agencies, which is warranted (see my earlier post on credit rating agencies).  It also imposes new regulations on the derivatives market; I am in no position to judge whether these are just right, insufficient or overkill.  Both the House and Senate bills create a new consumer watchdog agency, which is good news for whomever gets a job working at this agency, bad news for financial institutions that will face increased costs, and no news for the rest of us because we all know what a great job the existing watchdog agencies did preventing the financial meltdown two years ago. 

Neither the House or Senate bill does anything about Fannie Mae and Freddie Mac.  Also the Senate bill contains a provision limiting what credit card companies can charge merchants for debit card purchases.  If this becomes law, the result will be entirely predictable -- the cards will be less widely used and Visa et al will come up with new fees to offset the drop in revenue.  But this provision will allow some Senator to claim he has stood up for the little guy who is fed up with these outrageous fees charged by the charge cards.  Remember -- you need 60 votes.