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View Diary: So what has Obama done? (56 comments)

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  •  Whatever. Simon Johnson wrote (4+ / 0-)
    Recommended by:
    WisePiper, JeffW, commonmass, sharonsz

    The White House Needs Elizabeth Warren, Now More Than Ever

    The White House today is under pressure, with insiders asking: After the strong showing of the Republicans in the midterm elections, should the president move to the right or to the left?
    This is entirely the wrong way to think about the problem - the administration needs to get beyond its mental framework of early 2009, which led it sadly astray with regard to the financial sector. The President needs to find people and themes capable of cutting across the political spectrum; specifically he needs to promote strongly the ideas of Elizabeth Warren - what we need in financial services, above all else, is much more transparency.
    The Chamber of Commerce and other lobbyists help spend bank profits framing the consumer protection debate as being about "regulation," but that is not the issue.  We have had plenty of regulation in recent decades and still have lots of regulators.  The issue is capture.  Big banks in particular disproportionately captured the hearts and minds (and maybe more) of federal regulators.

    The best idea for rolling this back is Elizabeth Warren's - require more transparency and full disclosure.  In effect, this is applying the best idea from the 1930s reforms (when it was applied to securities and other investments) to mortgages and credit cards.  In the 1920s, there were terrible abuses of consumers around the investments that they were sold (see Michael Perrino's new book).  In the 2000s, the abuses were concentrated on the liabilities side of the consumers' balance sheet, i.e., on what they borrowed; again these were egregious abuses.

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