Ok, ok, we need oversight.

“‘Our current regulatory structure was not built to address the modern financial system with its diversity of market participants, innovation, complexity of financial instruments, convergence of financial intermediaries and trading platforms, global integration and interconnectedness among financial institutions, investors and markets,’ Paulson said this morning.” Stick a fork in free market fundamentalism: In light of recent economic events, Dubya Secretary of the Treasury Henry Paulson proposes a massive overhaul of the nation’s regulatory apparatus. The plan, which among other things bolsters the powers of the Fed and phases out the SEC, isn’t getting the most favorable reception from Dems thus far. Said Chris Dodd: “Regrettably, the Administration’s blueprint, while deserving of careful consideration, would do little if anything to alleviate the current crisis — which was brought on by a failure of will.” Still, with even Team Dubya and its allies signing off on the need for it, regulatory reform of Wall Street and financial markets looks to be on the table to stay, one way or another.

Kuttner: He’s the real deal.

Barack Obama’s speech on the financial crisis was a remarkable breakthrough…I wish I had written the speech. It is this kind of leadership and truth-telling that is the predicate for the shift in public opinion required to produce legislative change. A radical, appropriately nuanced, and deeply public-minded description of what has occurred, the speech was Roosevelt quality: the president as teacher-in-chief.

The American Prospect‘s Robert Kuttner praises Obama’s economics speech of yesterday, and calls out Paul Krugman for his blatant partisanship: “Unlike some of my friends, I have not fallen in love with Obama…But Krugman, ordinarily an ornament of fair-minded progressive economics commentary, writes almost as if he has become part of the Clinton campaign. His latest characterization of Obama’s proposals in commenting on the New York speech — ‘cautious and relatively orthodox‘ — was preposterous.

The New Deal fights on.

“Despite sustained efforts to tear down the New Deal — from the repeal of the Glass-Steagall Act in 1999 to President George W. Bush’s ill-fated 2005 efforts to dismantle Social Security — the 1930s-vintage infrastructure has proved remarkably durable…Although the Tennessee Valley Authority has yet to pitch in, four 70-year-old agencies are helping to cushion the blow of the housing bust. Let’s count them.Slate‘s Daniel Gross examines how the New Deal is working to mitigate today’s credit crisis. (He also has a funny line about Sen. Clinton’s bizarre call yesterday to have Greenspan wave a magic wand to fix things: This “is a little like Chicago appointing a cow to a panel on preventing disastrous fires.“)

Bare Stearns. | We are all NOLA?

“The Wall Street titans have turned into a bunch of welfare clients. They are desperate to be bailed out by government from their own incompetence, and from the deregulatory regime for which they lobbied so hard…It’s just fine to make it harder for the average Joe to file for bankruptcy, as did that wretched bankruptcy bill passed by Congress in 2005 at the request of the credit card industry. But the big guys are ‘too big to fail’ because they could bring us all down with them.” After the Bear Stearns deal and all it would seem to portent about the condition of the Dubya economy, E.J. Dionne reads the riot act to free market fundies.

In related news, WP’s Dan Froomkin’s notes how Dubya’s handling of the economy is now being compared to the aftermath of Katrina. ‘As the storm clouds gathered, was President Bush once again asleep at the wheel? A consistent theme in today’s political and economic coverage is that Bush’s failure to recognize the severity of the ongoing financial crisis and act accordingly is reminiscent of his disastrously slow and inept response to Hurricane Katrina….’As with the war in Afghanistan, the Iraqi war aftermath, the Hurricane Katrina disaster and current efforts at Mideast peace, investors are concerned that the president is responding too late and with inadequate understanding, resources and creativity.'”

Spitzer’s Out…Hubris or Death Wish?

“I am deeply sorry that I did not live up to what was expected of me. To every New Yorker, and to all those who believed in what I tried to stand for, I sincerely apologize. Over the course of my public life, I have insisted — I believe correctly — that people regardless of their position or power take responsibility for their conduct. I can and will ask no less of myself. For this reason, I am resigning from the office of governor.Spitzergate comes to its inevitable close as the Governor resigned this morning, paving the way for Lt. Governor David Paterson to take office in Albany. (Yes that means Clinton -1.)

I know that some Dems have argued that Spitzer shouldn’t resign, citing David Vitter in particular, and that something is fishy about the Dubya Justice Department’s handling of this case. To be sure, I haven’t been relishing the unsightly upsurge in schadenfreude among the GOP, Wall Street, and exactly the type of corporate ne’er-do-wells Spitzer spent a lifetime fighting.

But, let’s get real here: Spitzer’s actions weren’t only brazenly and colossally dumb, they were patently illegal. Now, one can question the purported immorality of the world’s oldest profession, and I would be among those who think it’s a relatively victimless crime, situations like human trafficking excepted. But given that Spitzer is a guy who’s personally put people in jail for prostitution and then condemned them in the press, this would seem to be a no-brainer. He had to go down for this, or he would have put himself above the law. So whether or not Spitzer had well-connected political enemies — and, of course, he does — is somewhat beside the point here. The real problem here is that Gov. Spitzer was so unfathomably stupid as to engage in illegal acts that he — better than virtually anyone else alive — knew would result in his downfall. And the tragedy is that, given what Spitzer might’ve accomplished in office otherwise, everyone now pays the price for his apparent inability to restrain his appetites.

Dont give me that do goody good bulls**t.

Score another one for legalized corruption (and lament anew what passes for Democratic leadership these days): Senate Majority Leader Harry Reid tells private-equity firms they don’t need to fear a tax hike this year. “[P]rivate-equity firms — whose multibillion-dollar deals have created a class of superwealthy investors and taken some of America’s large corporations private — hired dozens of lobbyists, stepped up campaign contributions and lined up business allies to wage an unusually conspicuous lobbying blitz [against a tax hike]…Several prominent lawmakers expressed surprise to find that the managers’ profits, known as carried interest, were taxed as capital gains, for which the rate is usually 15 percent. That is less than half the 35 percent top rate paid on regular income.

Embezzle for Freedom.

“Unbeknownst to almost all of Washington and the financial world, Bush and every other President since Jimmy Carter have had the authority to exempt companies working on certain top-secret defense projects from portions of the 1934 Securities Exchange Act. Administration officials told BusinessWeek that they believe this is the first time a President has ever delegated the authority to someone outside the Oval Office”. In related news (and as seen at Ed Rants), Dubya has apparently, on the sly, “bestowed on his intelligence czar, John Negroponte, broad authority, in the name of national security, to excuse publicly traded companies from their usual accounting and securities-disclosure obligations.”

Five for Fighting.

TIME Magazine unveils Josh Bolten’s new five-point plan for righting the Dubya presidency: 1) Act tough on immigration with “guns and badges”; 2) Humor Wall Street with extensions on capital gains and dividend tax cuts; 3) “brag more”; 4) Talk tough at Iran; and 5) play nice with the press. So, wait, we’re going to war with Iran just so Bolten can squeeze six more months out of lame duck Dubya? Brilliant.

Bernanke to the Banke.

So, as of yesterday, Ben Bernanke is replacing Alan Greenspan at the Fed. (“If Miers’s defenders have dismissed her critics as elitists, they showed no reticence yesterday in extolling Bernanke’s elite credentials.”) His conservatism notwithstanding, it sounds as if the choice was a solid one.

Catkiller goes Gekko.

By way of Looka, did Catkiller Frist pull a Martha? “Senate Majority Leader Bill Frist, a potential presidential candidate in 2008, sold all his stock in his family’s hospital corporation about two weeks before it issued a disappointing earnings report and the price fell nearly 15 percent…To keep the trust blind, Frist was not allowed to know how much HCA stock he owned…but he was allowed to ask for all of it to be sold.Update: The Post has more: “The notion that you have a blind trust but you can tell your trustee when to sell stock in it just doesn’t make any sense. It means you have a seeing eye trust and not a blind trust. It’s ridiculous.Update 2: The SEC steps in, and subpoenas start flying.