Simon Johnson has one of his best--and most important--posts yet at the top of his Baseline Scenario blog this morning, entitled: "
Who Will Tell The President? Paul Volcker."
As Kossack Devilstower noted in his FP post, this morning, Johnson's on fire and brutally timely as he now promotes his new book, "13 Bankers: The Wall Street Takeover and the Next Financial Meltdown," and as the US Senate now considers its version of H.R. 4173: Wall Street Reform and Consumer Protection Act of 2009.
Yes, parsing Devilstower's comments about Simon Johnson's and James Kwak's latest work--and the overall arching theme of most of Johnson's and Kwak's commentary for years, in fact--it "...shouldn't just be a wakeup call, but a call to arms."
If we're going to wrest our country's economy from the oligarchy, as Johnson empasizes it today, it's about being right here, right now. This IS the administration's "FDR moment."
Before I get into Johnson's post from earlier today, I wanted to reference something Nate Silver mentioned, back in October over at
538 about
how financial regulatory reform could be THE issue that might fracture BOTH right and left. Yes, no sooner do we witness some semblance of healthcare reform coming to fruition only to finally realize, en masse, that the political crap's hitting the fan, again. This time it's another (related)
transcending issue: regulatory reform of our economy and, as a byproduct of that, putting a saddle on an oligarchy-gone-wild -- what Johnson referenced as
The Quiet Coup -- which has occurred during decades of mostly-Republican, asleep-at-the-wheel, laissez-faire mismanagement of our economy.
If ever the term "Carpe Diem!" applied to resolving many major class-related problems within our economy, perhaps even throughout our society, as a whole--and if ever there was a proper time for this to occur--it's right now and over the next few weeks, as the entire Senate contemplates its version of: H.R.4173: "Wall Street Reform and Consumer Protection Act of 2009."
# # #
BACKGROUND LINKS TO: "THE WALL STREET REFORM AND CONSUMER PROTECTION ACT OF 2009."
Courtesy of the NY Times, here's a link to a comparison between the House and Senate versions of the bill: "Comparing the House and Senate Financial Reform Bills."
Here's the link to the Senate Banking, Housing and Urban Affairs Committee's summary of their version of the bill."
And, here's a list of the more than 400 proposed amendments to the bill, with the Senate Rethugs proposing well over 300 of them, including 109 from Senator Shelby (R-AL), alone. Add Corker's (64), Johanns' (33), Bunning's (28), Vitter's (25) and DeMint's (19) amendments, and you'll account for 277 of those amendments; and, that doesn't even include the other four GOPosaurs on the Committee.
# # #
Who Will Tell The President? Paul Volcker?
The Baseline Scenario
By Simon Johnson
March 28, 2010 6:18AM
Link to NPR radio interview (and book excerpt) on how 13 Bankers got their hands on so much political and economic power - and why this spells serious danger for the rest of us.
Against all the odds, a glimmer of hope for real financial reform begins to shine through. It's not that anything definite has happened - in fact most of the recent Senate details are not encouraging - but rather that the broader political calculus has shifted in the right direction.
Instead of seeing the big banks as inviolable, top people in Obama administration are beginning to see the advantage of taking them on - at least on the issue of consumer protection. Even Tim Geithner derided the banks recently as...
"...those who told us all they were the masters of noble financial innovation and sophisticated risk management."
In part this is window dressing. But in part it recognizes political opportunity - the big banks are unpopular because they remain completely unreformed and unrepentant. And in part it responds to a very real danger - Senator Dodd's bill is so obviously weak on "too big to fail" issues that it will be hard to paint its opponents as friends of big banks.
I dove pretty deeply into Johnson's "window dressing" narrative in my post, yesterday, in: "Johnson, Sen. Kaufman Slam "Meaningless" Wall St. Reform Bill."
Indeed, Johnson and Delaware Democratic Senator Ted Kaufman are very much on the same page.
As Johnson continues in his post this morning, he reminds us of Nate Silver's prescient commentary from many months ago...
...Senator Richard Shelby knows this and is taking the offensive. The administration can convert an easy win into an own goal if it fails to toughen substantially Senator Dodd's bill.
Fortunately, there's an easy way to address this issue...
Johnson continues on to provide a recent regulatory historical backdrop, reminding us that the administration's: "...economic team (Tim Geithner and Larry Summers) felt that no substantive change in the structure and incentives for deeply troubled parts of the financial system was necessary or even possible during the height of crisis. Consequently, they provided unlimited financial support to the country's largest banks - communicated by the "stress tests" - with no conditions, and they also proposed an initial set of legislative changes that was slight."
We're then reminded of how "...the largest banks immediately and demonstrably went back to their uncontrolled risk-taking ways, now based on obvious government guarantees."
The author tells us that these people "...engender crisis every year..."
It's "...very much part of the design now..." since it "...runs through a loop."
Yes, we're now at a point where it's all about privatized profits and socialized losses.
But, since last Summer, the arrogance of the Wall Street community has been quite notably beyond the pale.
Now, the administration is striking back. Some would say they're even going for Wall Street's jugular.
Enter Paul Volcker, this past Fall, who, as Johnson reminds us this morning, "...pointed out, simply and forcefully (and publicly), that our biggest banks were out of control and must be reined in.
But, even then, as Johnson annotates it, the Legislative Branch turned on its sausage machine and the "Volcker Rules" became little more than "mush."
Johnson calls the House version of the bill (see links, above), "...a step in the right direction."
We're told Volcker's not finished. On Tuesday, he'll speak at the White House again.
As Johnson concludes in his post, "...it's time to make the Rules real." That includes reducing the size of our big banks.
Johnson concludes...
....This is such an easy and obvious political win. Treasury and the White House economic team(s) can be brought onside by being allowed to claim this was their idea all along - or they can say something along the lines of "the facts changed, so we changed our opinions".
But if Paul Volcker doesn't tell the president, who will?
You know what to do...