Someone Needs to Talk to Congress About the Banks
According to Hendrick Hertzberg’s writeup of a recent New Deal 2.0 event, some of the critics of the administration’s approach to the banks are shifting to an interpretation of what’s happening that’s closer to what the administration’s friends are saying:
Stiglitz said he has the impression that while the Administration’s policymakers are familiar with the approach he and Solow advocate and have discussed it among themselves, it hasn’t been given the kind of in-depth consideration that has been extended to the solutions preferred by the big banks. “When push comes to shove,” Solow said, “politics wins over economics every time. It’s the unanswerable objection: ‘You can’t get it through Congress.’”
I totally get this. What I’m not sure I do get is why, if the administration’s had the ability to convince a large swathe of outside analysts that congressional politics are making a highly sub-optimal response necessary, we’re not seeing more signs of an effort to persuade congress that this is a problem.
18 Responses to “Someone Needs to Talk to Congress About the Banks”
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April 30th, 2009 at 12:16 pm
The first step is to slap together an image of the Capital dome with a big red FAIL! running across it, like you did for poor ol’ Ken Lewis.
April 30th, 2009 at 12:19 pm
You answered your own question: you know as well as anyone that the real reason is that “Policy Makers” are cowards – they are too scared to pursue nationalization and cave in.
April 30th, 2009 at 12:20 pm
Exactly. For an administration led by a bold upstart and community organizer, this seems an awfully passive way of accepting Congressional opinion as a complete blockage of sensible policy. Particularly given that if this banking and financial system thing continues to be done wrong, the country and Obama’s and the Democrats’ futures may go down the tubes. And in the latter two cases, deservedly so if better solutions are abandoned in favor of ‘politics’ and sheer class bias.
April 30th, 2009 at 12:21 pm
Get what through congress?
April 30th, 2009 at 12:23 pm
Yeah, it is kind of a problem if your goal is to fix the crisis. If your goal is to avoid responsibility however, it makes perfect sense. Obama’s government is about photo ops, big crowds, and grand speeches from a podium. When it comes to actually governing, his overriding motivation is whatever happens, it’s not my fault.
April 30th, 2009 at 12:29 pm
I had a sister-in-law die of cancer last year. On diagnosis she went into denial and paired with deep, evangelical beliefs she initially refused treatment. Things went downhill, then she agreed to necessary treatment and forestalled the disease for awhile. ultimately she succumbed. I think our politicians and their response to economic “disease” is similar to my sister-in-law’s story. In denial at first, then gripped by paralyzing allegiance to political expediency (religion in my relative’s case). Eventually they may tell interest groups, Wall Street and the banks to piss off but it’ll be like starting chemo way too late in the game.
April 30th, 2009 at 12:30 pm
The law says that the FDIC/Treasury is under has to close insolvent banks. Their insolvency is a lot less muddy than the question is oral sex, sex. This is all pissing into the wind I know. The law means what certain people says it means. Jay Bybee, Tim Geithner or Hank Paulson.
April 30th, 2009 at 12:36 pm
Senator Dick Durbin said it all . . . The banks own Congress!
What more do we need to know?
April 30th, 2009 at 1:00 pm
I’d suggest free continuing education courses for Congress in finance, but they’d just get lobbyists to write their papers and take their exams.
April 30th, 2009 at 1:26 pm
Obama’s biggest campaign contributor was the financial services industry. Congress is just the excuse Obama is using to coddle the banksters. The Obama/Geithner bankster bailouts are just a continuation of the BushCo/Paulson TARP giveaways.
April 30th, 2009 at 1:27 pm
“more signs of an effort to persuade congress that this is a problem. ”
They are called election cycles, and if I recall, Yglesias is likely someone who wants Congress to hold the position they were elected for. After all, what would Yglesias think if two economists convinced Congress of something not to Yglesias’ liking?
April 30th, 2009 at 1:48 pm
Obama is corrupt. A perful executive could force the banks to deal. A powerful executive can even ignore congress, both Obama and Bush have proven that. They just don’t want to, because they are bought and paid for.
Our entire system of constitutional government is horribly broken, and the powers that be only acknowledge that fact when ti gets them what they want. Every other time, they pretend these archaic traditions that they push aside whenever it’s convenient for them are etched in stone and filled with the blood of Thomas Jefferson and George Washinton.
The executive finds a way to shell out billions without consulting congress, but can’t find a way to break a few contracts and restrict bonuses. the executive finds a way to torture people in defiance of the senate, but can’t find a way to make some bankers eat a little shit. The executive finds a way to justify quartining protestors into cages, but can’t find a way to throw some of these bums in prison. All of this, the executive can do despite the fact that they are ALL in direct defiance of the constitution. Yet the powers that be do it anyway. However, when it comes time to help REAL FUCKING AMERICANS, then you act like you’re powerless.
don’t give me the “they can’t get it through congress” BS. congress never fucking mattered before. this is about unwillingness, not inability.
April 30th, 2009 at 1:52 pm
Why is a picture of Joe Stiglitz on this post?
April 30th, 2009 at 2:10 pm
PRE-PRIVATIZATION
That’s Robert Solow’s witty synonym for nationalization. He came up with it this morning, talking with reporters after a breakfast for a hundred or so center-left New York establishmentarians at the Regency Hotel, sponsored by the Franklin & Eleanor Roosevelt Institute.
Actually didn’t a blogger at Naked Capitalism or Calculated Risk coin that first?
I like the warm fuzzy feel of “receivership.” It’s where banks go to convalesce and recover in a comfortable environment.
April 30th, 2009 at 2:43 pm
“March 25, 2009
tg-70
Treasury Proposes Legislation for Resolution Authority
Treasury Secretary Timothy Geithner on Monday called for new legislation granting additional tools to address systemically significant financial institutions that fall outside of the existing resolution regime under the FDIC. A draft bill will be sent to Congress this week and several key features are highlighted below.
The legislative proposal would fill a significant void in the current financial services regulatory structure and is one piece of a comprehensive regulatory reform strategy that will mitigate systemic risk, enhance consumer and investor protection, while eliminating gaps in the regulatory structure.”
What’s wrong with this legislation?
I’m for Narrow Banking, can you tell me what this means?
“They see the lack of a thoroughgoing “reorganization of the financial system” as the “most disappointing” feature of the new dispensation.”
April 30th, 2009 at 4:40 pm
I think you’re totally misreading this. The “politics” are in the White House. The “politics” that Solow is referring to is BHO’s bullshit excuse that he can’t get it through Congress (given that he wants to get other things through first.)
BHO is as far from Solow, Stiglitz, and Johnson (SSJ) as he can be on this. He has been twisting every argument he can use to persuade the American people that SSJ want to do costs too much — or is too unAmerican.
April 30th, 2009 at 6:39 pm
There is no reason for credit card rates of 20-50% when our inflation is in the low single digits and prime is in similar ranges.
There is no reason for allowing them to rape the american public with that kind of usury.
How about protecting our ecomonmy, and American citizens by putting a reasonable cap on card rates that is not more than 10% above prime?
That help stop the credit card defaults, auto loan defaults, and mortgage loan defaults, when the credit card companies force people into default on all loans by pushing rates and payments several times what consumers initially agreed to with rates less than 10% initially … or even into bankruptcy where all lenders suffer because of the credit card abuses … and in the end, all Americans which pickup the tab for those unnecessary defaults.
April 30th, 2009 at 8:27 pm
@17 John re: Credit Card rape.
You know your society is in trouble when you legalize loansharking.
Any adult citizen who observed the proliferation of credit card use over the last 15-20 years and did not believe it would lead directly to a national calamity is a fool.