The financial reform kabuki

It started with Mitch McConnell (R-Ky.), the Senate minority leader, firing a warning shot about the true nature of the administration’s proposals. He said it was an effort to give Wall Street a permanent bailout. The language was carefully constructed and highly stylized to achieve three goals: to put the administration on the defensive, to achieve unity within his own caucus and to take care of the concerns of his own community bankers.

This kabuki thrust achieved its purpose. The administration reacted defensively, the Republicans stayed united and McConnell’s home-state bankers were pleased that the minority leader was taking a leading role.

The president reacted in an equally predictable fashion. He is going to Wall Street’s backyard to give a tough speech about the evils of the industry and the attributes of his proposal. For an additional bit of drama, his SEC filed a lawsuit against the top Wall Street firm, all in perfect timing as a way to put one of the biggest Democratic political contributors on the hot seat to show how the Democrats can play hardball too.

There are other players in this drama. Bob Corker, the Tennessee Republican senator, plays almost a Hamlet role. First, he is going to get a deal. Then he can’t get a deal. Then he is going to try to get a deal again.

Sen. Susan Collins (R-Maine), in another dramatic moment, announces that she will support her leader in his efforts at unity, not necessarily to filibuster, but rather to get the best deal possible for the Republicans.

All of this stylized thrust and parrying is happening in foreground. In the background, the real deal is getting done, between Senate Banking Committee Chairman Chris Dodd (D-Conn.) and his counterpart, ranking member Richard Shelby (R-Ala.).

There are a lot of moving parts in this particular kabuki theater, and to the untrained eye, it can seem to be quite boring, just like the real kabuki theater. I went to one once in Japan, and I could barely keep my eyes open.

But if you look closely enough, you can see that eventually, this will lead to a bipartisan bill. At least, that’s how I see it.

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