ON June 8 and again on June 9, I diaried here regarding what was clearly [to me, based on my research] turning into an internal war within the Obama administration on regulatory governance. These to me seemed to be huge policy differences that may have an enormous effect on our economic future - and they also seemed exacerbated by ongoing power plays by both Tim Giethner [with Citibank and dissing Warren's panel recommendations] and with Summers [trying to exclude Somers/Goolsbees ideas from being heard by Pres Obama].
Some among my readership wrote off the substance of my diary - despite ,y providing sourcing about those signs of significant policy discord. Now, today's NY Times front page online includes this:
Regulators Feud as Banking System Overhauled
By STEPHEN LABATON and EDMUND L. ANDREWS
The personal feud between two bank regulators is shaping the president’s attempt to revamp financial regulation.
MORE over the fold - and if my diary appears redundant I ask dkos readers' indulgence - since you read it here first way back on June 8-9
Yesterday, kos readers were treated to an upbeat and well-sourced diary on the economy by Bondad - on possible bottoming out of jobs losses.
I disagreed, in a comment in which I sourced this June 5, 2009 policy paper on comparative downturns through history by the Council on Foreign Relations. I did not yesterday - and do not today - believe that there have been any signs that the several crises listed in that paper have been mitigated. Those who wish to see my longer excerpt of this interesting paper's finding that "real economy indicators ...remain worse than anything hitherto experienced in the postwar period" - based on its conclusion that there have been "severe" results arising from an "asset market correction that destroyed savings and froze the credit system" can read my summary here.
I also had concerns that looking ahead, there was a big problem in hiring:
another of my comments cited survey data for U.S. employers’ hiring plans for the third quarter regarding my concerns that we were in for a bumpy ride on the jobs front...
First, however, historians of some early sources for my analysis last week can link to those sources in my June 8 diary, Geithner's regulatory merger - the risk of lax regulation and in this comment to my diary, which included a Bloomberg headline, "Citigroup Gains Geithner Backing as Pandit Bucks Bair"
and they can follow the trail further in my June 9 diary on weakness of of the basic statistical foundation of Geithner's stress test - tainting its outcome and reasing concerns about the health of banks. My June 8, 2009 headline concluded, "it's Warren & Bair versus Geithner now"
I admit it: my nose goes towards the sausage aspect of policy - making, as a guide to potential problems in policy coursemaking about which it may be well advised to learn.
Why? I feel it is a good way to, at a minimum, be informed of internal administration problems that can derail policy - and possibly even seek out ways as citizens to head off problems by informing others of these problems. [I was writing back in 2001 papers at law school about Republican policy makers who were beginning to use the 9-11 compensation legislation as a jumping off point to derail investigation of airlines' horrendous record of profit-driven safety actions, particularly at Logan. Watching out for history of how policy gets manipulated and twisted is my "thing."]
on Bondad's diary yesterday, I commentedthat I unfortunately do not share his optimism, because of the absence of mitigating factors since this June 5 paper describing ongoing crises noted by Paul Swartz of the Council on Foreign Relations on the historical context
I also cited this quote from Sheila Bair in Forbes:
"[The Fed] had authority to prescribe across-the-board lending standards for mortgages, and a lot of people said they should do that and they just didn't," Bair says as an example of where too many roles [e.g., a role as, say - protector of consumers] led to lapses.
Note that I annotated her quote to clarify Bair's point -that the FED simply is not capable of adequately protecting consumers because [in her view] it has too may 'roles' - particularly its 'role' as central bank]
In my comment I linked to the June 12 Forbes article.
my nose for concerns over the warfare between the Geithner/Summer duo and others in the administration was also triggered by a throwaway line in a Sunday Times article about policy making in the WH. Commenters are welcome to find that link. In the article, the author noted that Summers had disinvited Ausden Goolsbee [sp?] from a policy roundtable with Obama - and had gotten caught by Obama. Goolsbee is one of three folks on the WH Council on Economic Advisers [CEA] headed by the fabulous Christina Romer and Summers' attempted power play was even then making it clear to me that this duo simply did not like differing opinions to come before Obama
Concerns over the Geithner/Summers policy direction re: Banks were already being broadcast in this June 7, 2009 Washington Post article, which quoted MIT economist Simon Johnson and Douglas Elliott, a finance specialist at the Brookings Institution, for what WaPo summarized as
independent experts warn that the government's relationship with the industry is entering a precarious new phase. As with mortgage giants Fannie Mae and Freddie Mac, the government will no longer share in the banks' profits, but it still stands ready to absorb losses.
Now the problems about which I blogged have 'risen to the surface even at the NY Times, in this article claiming Regulators Feud as Banking System Overhauled
As my focus is historical I am not going to pull text from the NY Times article. Read it and your comments will be welcome.
And a shout out to the great bobswern - whose diaries should be required reading!
PS I am a geezer who learned where the computer on switch was in my 40s and learned to typed after that. Please forgive my numerous typos, some of which I have just edited out.