Something happened last fall I thought would never occur in my lifetime. The voters rose up in anger and threw enough Democrats from Congress to give Republicans control of both chambers.
My guess is that the revolution isn't over. Many politicians in Congress and the administration are playing the same old political games in the same old ways, and the public is becoming ever more frustrated.
I sense this frustration everywhere I go, among people from all walks of life. It's particularly striking among the most traditional and Republican of groups, bank executives.
Bankers were full of hope after last year's electoral earthquake. The Clinton administration had favored pro-competitive reforms of the financial system even before the election. The Republicans won control of Congress by promising to get government off the backs of people and to let the marketplace work.
The first test in the financial arena was the Glass-Steagall Act, which restricts competition between commercial and investment banks. The case for reform of the law is so compelling that even an ardent populist, former Sen. William Proxmire, championed it.
Reform of Glass-Steagall should have been very easy. The first monkey wrench, however, was tossed in by the Federal Reserve. The Fed decided the Glass-Steagall reform bill offered an irresistible opportunity to expand its turf.
The Clinton administration had tried to strip the Fed of some its authority in early 1994 and lost. When power shifted in the Congress - and "friend of the Fed" Jim Leach replaced "foe of the Fed" Henry Gonzalez as chairman of the House Banking Committee - it was time for a little payback.
A not particularly controversial bill to reform the Glass-Steagall Act became senselessly bogged down. The Fed's power grab was the kind of move that has given Washington a bad name for a long time.
Perhaps the Fed ought to have more power and can make a persuasive case for it. If so, it should seek power forthrightly, not by holding hostage other legislation that is clearly in the public interest.
Perhaps emboldened by the Fed's tactics, the independent insurance agents also decided to pile on the Glass-Steagall reform bill.
The Comptroller of the Currency, the agents argued, had gotten out of hand in ruling that life insurance and annuity products are financial in nature and appropriate for national banks to sell to their customers. Never mind that the Supreme Court agrees with the Comptroller and that the public benefits.
The insurance agents recruited a couple of impressive Republican friends to do their heavy lifting - former insurance agent Gerald Solomon, currently chairman of the House Rules Committee, and none other than Mr. Free Market himself, Newt Gingrich. They not only have Glass-Steagall reform tied up in knots but also are holding hostage a bill to reduce materially the cost and burden of banking regulation.
At this juncture, along comes the issue of what to do about the looming deposit insurance premium disparity between banks and thrifts. The politicians have decided the Bank Insurance Fund and the Savings Association Insurance Fund should be merged to eliminate the problem.
Most of the cost of servicing the FICO bonds issued by the thrift insurance fund would be imposed on the banks. The multiyear cost to the banks of that item - $12 billion - is impressive even by Washington standards.
It's appalling, almost incomprehensible, that the politicians would tie up the banking industry's most important legislative priorities this year and then have the temerity to demand that the industry donate $12 billion to a competitor. Moreover, the industry is expected to do it in a hurry, not ask too many questions, and not ask anything in return.
Bankers, as a group, are more public spirited than most people. They will likely be willing to pick up the $12 billion tab left over from the S&L mess. If they do, the nation will owe them a great debt of gratitude.
By way of thank you, they should at a bare minimum receive their two priority bills without the Fed's and the insurance agents' self-serving, outlandish restrictions.
Mr. Isaac, a former chairman of the Federal Deposit Insurance Corp., is chairman and chief executive officer of Secura Group, a financial services consulting firm based in Washington.
