Nate Silver touches on the issue of financial regulation reform and the Glass-Steagall II measure that Paul Volcker is advocating, and makes an observation about the looming legislative battle that seems astute:
From a 30,000-foot view, the debate will be between the Volckerists and the Summersists, with the Volckerists arguing that large financial institutions need to be broken up — probably through something resembling a modern Glass-Steagall Act — and the Summersists arguing instead for more extensive regulations.
The ‘hard’, online left will almost certainly take the Volckerist position. In fact, I expect this to be the “public option” of 2010, the badge of pride that “movement progressives” will use to distinguish themselves from “kleptocrats”.
This is exactly the split that I was referring to in my earlier post on Volcker. Most people don’t know or care about even the broad outlines of financial regulation, except that the left is usually in favor of more and the right in favor of less regulation of any kind. The kinds of regulations that Larry Summers or Austan Goolsbee would propose would be more intricate and hard to follow than Volcker’s plan, which is readily understandable: split up the banks. It seems like a natural rallying point for the liberal left: financial reform without splitting up the banks is no reform at all.
Of course, someone will have to come up with a name for it that’s as snappy as “public option.” I personally cannot think of a way to make prohibiting banks from engaging in both commercial and investment banking activities seem sexy.