Simon Johnson: With Banking, Question Everything

[marmar]

from the New York Times:




July 22, 2010, 6:00 am

With Banking, Question Everything
By SIMON JOHNSON


Simon Johnson, the former chief economist at the International Monetary Fund, is the co-author of “13 Bankers.”

President Obama’s signing of the financial reform bill on Wednesday does not end our intense debates over banking. Rather, it just moves them to a new sphere. Instead of arguments about legislation in Congress, the next arena is the action (and perhaps inaction) of regulators.

Those pushing for more effective regulation of the financial system are looking for progress in three areas. The first two — raising capital standards and appointing new regulators — are the most discussed, but powerful interests are blocking real change. The third — tougher and smarter Congressional oversight — holds great promise.

First, on key issues such as capital standards there could theoretically be a breakthrough in the so-called Basel Process of international negotiations during the run-up to the November summit meeting of the Group of 20 in Seoul. Some senior American administration officials continue to make bullish off-the-record remarks, but Sheila Bair, chairwoman of the Federal Deposit Insurance Corporation, sounded a much more cautionary note this week. And European participants continue to emphasize that Germany does not want a significant increase in capital for its banks.

The view here is that the lowest-common-denominator approach is likely to prevail. That was the consensus at last week’s Future of Finance meeting in London, which is not at all encouraging. ..............(more)

The complete piece is at: http://economix.blogs.nytimes.com/2010/07/22/with-banking-question-everything/?hp

[groovedaddy]

1. And this interview on Fresh Air yesterday w/ Binyamin Appelbaum - NY Times

http://www.npr.org/templates/transcript/transcript.php?storyId=128644947