Bloomberg takes a good look at the fading chance to anything meaningful to reform the financial system, noting that “Two years after the start of the deepest recession since the 1930s, no U.S. or European authority has put in force a single measure that would transform the financial system…”
You can say that again. The story is framed around the towering figure (literally and metaphorically) of Paul Volcker, quasi-attached to an Obama administration run by people too close to Wall Street. A very good question for the press to put to Volcker is why he’s lending his credibility and veneer of toughness to such a team.
Because what he’s saying probably sends the Obama PR team into fits:
“There is a lot of evidence that financial weaknesses brought us to the brink of a great depression,” Volcker, 82, said Dec. 8. at a conference in West Sussex, England. He told executives there that the changes they’ve proposed are “like a dimple.”
Bloomberg is good to point out the important caveat that it took years after the Great Depression (or at least the stock market crashed) began in 1929 for major reforms to be implemented.
But it goofs by quoting a CATO think-tanker talking about the need to take things slow. It’s fine to quote him, but It should have spelled out that CATO is a libertarian organization opposed in principle to most government regulations.
The flipside of the coin is that the story quotes Bernie Sanders, Socialist, of Vermont, but just labels him an “Independent.” Hey, Joe Lieberman is an Independent, for crying out loud. Not all readers are politically tuned-in enough to know where Sanders is coming from or what CATO is. There are others who aren’t clearly identified here. It’s Bloomberg’s responsibility to tell them.
But you’ve got to hand it to them for quoting a guy who’s been in the trenches since the first Black Monday:
Governments should separate deposit-taking banks from those that use their own money to trade and issue securities, said Irving Kahn, 103, who has worked on Wall Street since 1928.
“I wouldn’t lend you a dime if I knew you loved to gamble at a casino,” said Kahn, the chairman of investment advisers Kahn Brothers Group Inc., in an interview.
Bloomberg, as is not uncommon, does not do a very good job putting this story together. It doesn’t read very well. But its heart is in the right place, its thrust is true, and it’s an important story to keep hammering home. And it has a decent chart rounding up the efforts going on here and around the globe.
True reform—a Glass-Steagall II, low caps on bank size, reining in securitization, empowering a consumer regulator with teeth, disincentivizing debt in the tax code, eliminating or cracking down on credit-default swaps, a “Tobin” transaction tax, compensation reform, etc.—hasn’t happened.
And it’s unlikely to happen.
Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR’s business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu. Follow him on Twitter at @ryanchittum.