Spitzer’s formulation is nothing we haven’t heard before. The government intervenes because it has to. It intervenes because it remains the only actor capable of ensuring “integrity, transparency, and fair dealing” among and within companies. Businesses are not governments – and therefore, should not be expected to act like them; the only principle to which they are bound is the bottom line. Governments must act to circumscribe corporations where their actions negatively impact other competitors or the market generally. If these are the premises we hold to be true, then obviously our existing regulatory framework falls short of the mark. But not in the conventional sense. According to Spitzer, our regulatory bodies already have sufficient powers to do the work necessary to punish offenders and prevent systemic failure. The problem, as he sees it, lies not with the framework but with the regulators themselves. And the costs have been dear. While we continue to undergird an unrepentant Wall Street, we have neglected to invest in recovery projects that would employ thousands of Americans in building a 21^st-century economy. With the loss of its 60^th vote in the Senate and midterms fast approaching, one only wonders how much longer the Obama administration can afford to keep taking this middle road, pleasing no one and arguably displeasing more.

A cause célèbre among liberals, financial regulatory reform has become the most recent partisan boxing match on the Hill, following a stormy (and ongoing) healthcare battle. Evidence to the contrary notwithstanding, Republicans have wasted no time in making the case that regulation is precisely how ‘we got into this mess.’ With thousands more joining the unemployment lines daily, it’s becoming harder to sympathize with such a position. So far from offering a prescriptive solution, it offers platitudes. But slogans don’t feed families and they certainly don’t jumpstart faltering economies. That hasn’t stopped the debate from being fought at the ideological margins as a veritable referendum on capitalism. To its credit, Baker’s piece has no interest in such a discussion – indeed, he makes clear at the outset that regulation has nothing to do with a free-market story, but rather an equity story. Banks have been ready if not eager to line up for government checks when it behooves them. In fact, the insurance scheme implemented in the wake of the 1930s collapse, ostensibly a consumer protection, effectively insulates banks – particularly large ones – whose failure would cause systemic damage to the larger financial system.

Because the failure of large banks poses a non-trivial threat to the economy, government aid is a forgone conclusion. What’s worse is they know it. To offer government insurance of deposits without also regulating the behavior of its recipients would be akin to an endorsement of reckless behavior – the kind that penalizes smaller banks who get swept up in the storm, despite abiding by conventional, low-risk strategies. As Baker notes in his piece, “The banks presumably understood the risk that they were taking in making loans in the first place. They are in the business of distinguishing good credit risks from bad. A financial institution that is unable to make such distinctions is misallocating capital.” Hewing to a capitalist argument, then, shouldn’t it follow that the government ought not to intervene and merely let the market do what it will, shuttering the windows of banks who are unable to compete? I sense the boardrooms of America would chafe at my glibness, but the point remains: if you want to be consistent in your ideological arguments, one can’t ignore the double standard by which the banking industry has managed to reap the benefits of government intervention while actively resisting meaningful regulatory changes.

Although the regulatory fight is only just getting started, the administration is taking preliminary steps to address the problem with President Obama’s decision this afternoon to implement a tax on TARP funds to recoup the projected $117 billion in losses from the original $700 billion loan program. In strikingly populist language, the President made it clear that stalling tactics would not prevent his administration from doing the people’s business, calling on Wall Street to “meet [its] responsibilities.” Some 50 companies are expected to fall under the new guidelines. It also represents a major shift in existing policy, where administration officials like Secretary Geithner previously asserted that such a tax would merely be passed on to the consumer; these pressures are expected to be minimal since the tax is targeted and affected companies will presumably still have an incentive to remain competitive. Industry spokesperson Steve Bartlett called the move “strictly political” and maybe it is. But that doesn’t mean it wasn’t the right move. Nor by any means should it be the last.