October 9, 2009
This week on the JOURNAL, Bill Moyers’ guests were one of Congress’ leading progressives, Rep. Marcy Kaptur (D-OH), and former IMF chief economist Simon Johnson, who shared their perspectives on Washington’s failure to reform the financial sector since last year’s economic catastrophe.
While Kaptur and Johnson broadly agreed that Wall Street’s influence has stymied government efforts to rein in large banks and trace how several hundred billion dollars of bailout money has been spent, they differed over their interpretations of President Obama’s actions since taking office.
Rep. Kaptur suggested that Obama is making an honest effort but is being misdirected by the wrong economic team:
“Mr. Geithner came from the New York Fed, he came from Wall Street, and he becomes Secretary of the Treasury... You can go back decades and you will see that there’s this revolving door between Wall Street and Washington... I still have hope for President Obama and his wife Michelle. When Lincoln ran into trouble during the Civil War, he got new Generals. He brought in Grant. I hope that President Obama will bring in some new generals on the financial front. I don’t think any individuals who had their hands in creating this mess should be in charge of cleaning it up... I don’t think President Obama has the right people around him. The poor man inherited a total mess, globally and domestically. I think some of the people that he trusted haven’t delivered. He and his wife are extraordinarily intelligent people. I urge him to get new generals, it’s time.”
Johnson, who noted his support for Obama’s presidential campaign, was skeptical of the argument that the President isn’t fully behind his Administration’s financial policy decisions.
“President Obama campaigned on a message of change... I thought that the time for change, for the financial sector, was absolutely upon us... Rahm Emanuel, the President’s chief of staff, is widely known for saying ‘never let a good crisis go to waste.’ Well, the crisis is over. The crisis in the financial sector, not for people who own homes, but the crisis for the big banks is substantially over, and it was completely wasted. The Administration refused to break the power of the big banks when they had the opportunity earlier this year, and the regulatory reforms they are now pursuing will – in my opinion and I do follow this day to day – turn out to be essentially meaningless... Louis XIV of France was a very powerful monarch [who] was famous for having bad things happen under his rule, and people would say ‘If only Louis XIV knew, I’m sure he doesn’t know. If we could just tell him, he’d sort it out.’ I’m skeptical.”
What do you think?
# In your view, is President Obama making a serious effort to enact substantive financial reform? Do you agree more with Kaptur or Johnson’s interpretation of his actions thus far?
# Has the Obama Administration’s handling of financial reform affected how you view its efforts on other issues, such as health care and environmental policy? Why or why not?
# What financial reforms do you want to see Washington pursue? Explain.
(For more from Simon Johnson, visit his blog at baselinescenario.com
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