Simon Johnson has been beating the drum a bit on something called the Kanjorksi Amendment that made its way into the final bill. That would enable a super-majority of the new financial-regulatory council to split up a bank if it poses “a grave threat to the financial stability of the United States.” But that’s different anyway from a firm cap on assets and liabilities, and does anyone believe regulators will use such authority?
Just for kicks, I present to you the top five biggest banks in America, by assets, with my own special addition at No. 8:
1—Bank of America, $2,340,667,014,000
2—JPMorgan Chase, $2,135,796,000,000
4—Wells Fargo, $1,223,630,000,000
5—Goldman Sachs, $880,677,000,000
*8—All 775 FDIC Problem Banks in the Country Combined (as of six weeks ago), $431,000,000,000
— Martin Wolf of the Financial Times (emphasis mine):
The crisis has revealed deep faults within western economies and the global economy as a whole. We may be unable to avoid further earthquakes.
In his book, Prof Rajan points to domestic political stresses within the US. Related stresses are emerging in western Europe. I think of it as the end of “the deal”. What was that deal? It was the post-second-world-war settlement: in the US, the deal centred on full employment and high individual consumption. In Europe, it centred on state-provided welfare.
In the US, soaring inequality and stagnant real incomes have long threatened this deal. Thus, Prof Rajan notes that “of every dollar of real income growth that was generated between 1976 and 2007, 58 cents went to the top 1 per cent of households”. This is surely stunning.
No further comment necessary.
— The Huffington Post’s Shahien Nasiripour reports that Treasury Secretary Tim Geithner is lobbying against Elizabeth Warren as first head of the Consumer Financial Protection bureau. Of course he is.
Treasury tried to spin a denial, but Nasiripour followed up:
Given the opportunity to refute the HuffPost report that Geithner opposes her nomination, (Assistant Treasury Secretary) Barr reiterated that both he and Geithner believe she’s “exceptionally well-qualified.” He didn’t deny the rift.
The Wall Street Journal reports that Barr himself is up for the position.