Rumblings On The Ocean Floor

If today's stories are to be believed, we have what looks to be a sea change in American politics.

First, we'll see major financial re-regulation:

The Obama administration plans to move quickly to tighten the nation’s financial regulatory system.

Officials say they will make wide-ranging changes, including stricter federal rules for hedge funds, credit rating agencies and mortgage brokers, and greater oversight of the complex financial instruments that contributed to the economic crisis.

Broad new outlines of the administration’s agenda have begun to emerge in recent interviews with officials, in confirmation proceedings of senior appointees and in a recent report by an international committee led by Paul A. Volcker, a senior member of President Obama’s economic team.

A theme of that report, that many major companies and financial instruments now mostly unsupervised must be swept back under a larger regulatory umbrella, has been embraced as a guiding principle by the administration, officials said.

Some of these actions will require legislation, while others should be achievable through regulations adopted by several federal agencies.

During the campaign, Obama talked frequently about regulating financial entities for what they do and not what they say they are. The Volcker Report basically flows from that, and it means that the party's over for Wall Street and the shadow banking system. Just enforcing what's on the books would be a start, but this signals something more sweeping.

In the LA Times, there's a hint that cap and trade is on the way.

The Obama administration is pushing forward with plans to aggressively limit greenhouse gas emissions and fight global warming despite fears that the move could further slow the recessionary economy.

The administration plans to portray the limits as a boost for America's "clean energy economy," according to congressional leaders and energy experts who have talked with top Obama advisors. The move would spur competition and promote investment in renewable alternatives to imported oil, the government will argue.

At issue is the so-called cap-and-trade initiative, under which the government would set limits on carbon emissions by power plants, factories and other installations, but allow those who emit more to buy or trade permits with companies and facilities that emitted less than the prescribed limit.

The relevant committees are talking about a bill by Memorial Day. My view is that we can't afford NOT to institute some controls that price carbon, otherwise emitters will continue to push greenhouse gases into the atmosphere, and the resultant effects on our climate, on natural disasters, on the coastlines, would be catastrophic and extremely costly, much more than the expected rise in energy prices.

Now, if Obama can recognize that bailouts aren't solving the financial crisis and that instead of giving Wall Street more play money, we just have to swallow our ideological pride and nationalize the banks for a time, then we'll really have change we all can believe in.