Simon Johnson: The Opportunity for Real Reform of the Financial System Has Already Passed
By Heather Sunday Oct 11, 2009 9:00am
From Bill Moyers Journal, Simon Johnson paints a bleak picture of what's ahead for us due to Washington's unwillingness to regulate the financial industry and Wall Street.
BILL MOYERS: You asked on your blog, just this week, a question I want to put to you now, and to both of you. You asked, 'Does this crisis reflect something about the disproportionate influence of a few incompetent investment bankers or a deeper breakdown of capitalism?'' What's your answer to your own question?
SIMON JOHNSON: Well, definitely, this disproportionate influence of some fairly incompetent bankers, that's for sure. That's what we're seeing today. That's what we've seen over the past few months. I think on the issue on the issue of capitalism, we have to take this very seriously. To me, at least, the financial part of our capitalism is very seriously broken.
They persuaded us to allow them to take incredible risks. And then they pushed all the downside, all those losses onto us, the taxpayer, at the same time as really hammering hard all the people who were duped, essentially, into taking out loans. People lost their houses. It's an absolute tragedy. This combination cannot go on. And yet, the opportunity for real reform has already passed.
And there is not going to be not only is there not going to be change, but I'll go further. I'll say it's going to be worse, what comes out of this, in terms of the financial system, its power, and what it can get away with.
BILL MOYERS: Why?
SIMON JOHNSON: That's the.
BILL MOYERS: Why is it going to how is it going to be worse?
SIMON JOHNSON: Well, there's four we used to have a dozen or so substantial big banks, now we're down to four. Now we're down to four big banks that have a lot more market power and a lot more political power. They make the campaign contributions. They shape agendas in ways that are that are really quite scary.
If you look, for example, at derivatives. And the debate on whether or not derivatives should be regulated in a sensible manner. And at this point, actually, the Obama Administration has is leaning in a better direction. But the big financial players are absolutely against any kind of sensible regulation. And I think they're going to win.
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The capitalists behind their corporate shields, are doing their job, which is to take for themselves and their shareholders as much as they can get away with.
This is a pernicious and venal system, replace it with a system that eliminates the corporate shield and requires social and environmental responsibility for the individual and collective actions of its members, most especially the powerful.
In search of a more egalitarian, just and fair society, first we must institute DEMOCRACY.
Public financing of elections, get the private money out!
I like the way your edits eventually zero in on the root of the problem - financing of elections.
(Repost...)
I’ll go one step further: A moratorium on campaign contributions for anyone but registered voters. That would eliminate corporate bribery, PAC contributions, lobbyist graft, foreign influence, and most K-Street corruption.
These groups CAN’T VOTE - and they shouldn't be able to influence policy using their/our money.
It does take a few swipes of the proverbial pen to get the ink out in a coherent manner.
But I was already one step beyond, saying that we should have public financing, period.
LOL - I would sound completely incoherent were it not for my own edits.
While I do think Public Financing would level the playing field, I don’t see a problem with allowing voters the option to support their candidate’s bid. With limits, of course (i.e. max contributions).
To me, it’s like term-limits (which I don’t support). I don’t like laws which limit selection. If a public-official is doing a good job, I see no reason not to allow him to continue doing it. Likewise, if a voter wishes to support a candidate via money for the campaign (which is the easiest support to make), I see no reason not to allow it (again, within limits).
I think corporations, PACs, and the like, should not be able to support a candidate in such a way. Their individual members, yes. But to say individuals must have limits to contributions but not these other groups grossly side-steps the reason for political contributions entirely. It simply allows collective bribery.
Why has the time pass for financial reform!!!
It is a bill that has to be written and passed.
I did not know that our government officials had a certain time tables to create and pass legislation...
It never stops this government from passing legislations for the transferring wealth , power , laws and control for These Global Empires.
So when we need legislation to create real progress to eliminate corruption from ?our? elected officials and their ties to Global Giants then why is there a time limit of a certain time...
"While I do think Public Financing would level the playing field.."
Will it really? I'm not so sure with all these electronic vote tabulation devices (e.g. Electronic Voting Machines) which break the "public oversight" part of the chain of custody. People can't see the signals which represent the votes.
There's more to it than just big money though.
Corporate media. They can literally eliminate candidates off the ballot, by steering the discussion. There's no feedback loop to hold them accountable? Why aren't their Public File's available online?
Personally, I think there should be NO FINANCING of our elections. Hey, it's the public broadcast spectrum, HAVE THE FCC TAKE IT!
I disagree with Simon Johnson about real reform. The sooner it is done the better. The problem as I see it, is "most people" don't know what "real reform" is.
I personally can't explain it very well, on the other hand Karl Denninger can.
I can say this, there ought to be 1000-3000 FBI agents knocking on banksters doors.
status!!
I watched this show yesterday then went to a screening of "Capitalism: A Love Story".
Michael Moore was steaming right along toward the end, made a few quick references to the big banks that had screwed over the tax payers about a year ago, then showed their logos and made a quick mention of the fact that they had all contributed to Obama's campaign.
Then came the election from about a year ago, all the tears, the throngs of people and "Happy Days Were Here Again". (And I will remind everyone that I cried too as I had worked hard for Obama).
But Moore, who admitted he was in the editing room finishing this film literally a few weeks ago, never went all the way and never mentioned that after Obama was Inaugurated he quickly made Lawrence Summers his Economic Adviser IN THE WHITE HOUSE, and Timothy Geithner the head of Treasury.
Rather than head out of the gates running hard and making Climate Change and EMERGENCY Wall Street Regulations against dealing in derivatives and other "exotic" instruments that plunged us into the scene where Henry Paulson robbed the U.S. Treasury with a three page memo, he invited the head of United Health Plans for lunch at The White House. And now here we are with Mandates, Fines/Penalties/and the threat of arrest and total confusion (even with poor Frank Rich from today's NYT).
If Michael Moore really believed, as I do, that Wall Street should have been yellow-ribboned off as a crime scene and those who perpetrated the scams should have been arrested (other than Madoff etc.), then WHY DIDN'T MOORE GO AFTER THE OBAMA ADMINISTRATION?
Obama's line whether regarding torture, or Wall Street crimes is "We need to look to the future, not to the past", may go down in history as the statement that best described his failed presidency. He has completely capitulated to corporate America AND the MIC.
It sounds like that line came right out of the G.W. Bush/Cheney playbook.
As far as a good "documentary" goes...that is where Moore failed.
I did like the fact that Moore had a great segment in the film that showed co-ownership of a factory where ALL the employees had a stake in the profits and outcomes and all had a single vote on all matters of running the company. Lots of happy people and management there. Seeing "everyone" sit in the cafeteria together eating lunch and then later voting on things was really the way it should be. We need to make the United States a "win-win" as to "labor and management". Right now it's "lose-win" or "lose-lose".
Hey Abbybwood…
I had to go out in the real world and pretend that I still have it to do what I have done all my life. I think I did, but now I am back to being a cyber hermit, more or less.
What a long and thoughtful comment.
I have not seen Moore's movie. I have never seen any of his movies. He is local hero. Flint is just down the road.
Both Flint and Detroit are in steep decline.
The yellow tape most certainly should have gone right out on the Wall Street Mafia.
Maybe next time, there will be a next time and it is coming too soon.
These are the policies the big corporations are taking out on their employees then when say the secretary, Mary, gets breast cancer and dies, the company she's working for collects a cool million and her family accidentally finds out after the fact.
It's especially hurtful when a wife sees this of her husband....him being referred to as a "PEASANT".
Michael Moore had a nice section about this in his film.
There was a section on it IN C&L.
In insurance there is the concept of insurable interest, which theoretically limits who can take out insurance on whom. Credit default swaps are infamously linked to this concept, in reverse.
But apparently that has been circumvented here, the most cynical of us would say, AHA! and the corporation takes out insurance on their peasants and then poisons them, RIGHT?!?!
You might have noticed my contrarian thinking from time to time.
The poor bereaved spouse should not be hurt by the peasant appellation but by the specter of another lost battle in the class war. Quite aside naturally from the personal loss.
This is what I am freaking about.
The annihilation of meaning in language was the predicted goal of Orwell's Newspeak.
The corporate propagandists know well what they are doing, and they rejoice when the good guys UNWITTINGLY take up their distortions of language and use it themselves.
Marcy Kaptur does this when she uses the term 'Corporate Socialism'.
These are mutually exclusive terms that should never be joined.
I made a similar connection here.
Socialism is about guaranteeing egalitarian results of the benefits of society, and fair and just demands for the bearing of the cost.
The Capitalists and their Corporate Propagandists always attempt to turn the language against the society.
They are, after all, advocating that all rewards go to the few while the costs go to the many.
overall this is the problem. there's too much money/loopholes like bundling on capitol hill. of course you're well aware the special interests/financial elites want a lot of money to rid fairness/competition.
the religion of capitalism has taken the place of democracy. until we reduce the amount of monies for elections this will not be our country.
America's "Bastille" moment? That is, if there ever is one. A frog in boiling water...
There was never an opportunity for real financial reform. The financial industry owns Washington.
Well let's hope they don't win. I know it's the same old same old but phone Barney Frank's office.
Here is his website.
Phone numbers (call them all --- often!):
(202) 225-5931
(617) 332-3920
(508) 999-6462
On his site it says:
To contact the "Financial Services Committee." Phone: (202) 225–4247 or email them using this form.
If you would like to send an email to Barney you can fill out this form. If you do not live in his district you can use 02740 as a zip code to get to his email form. the thing about email is that it is not as good as the phone. I have no idea how much it matters but calling and writing cannot hurt. I will give out this info during the week to remind everybody to contact these people. I hope that the C+L staff understands.
It's all in the charter you know.
It's illegal for them to act any other way, so why would they?
Just to let you know it's not like that in the other financial markets, the US has the laxest rules of all of them and that is why the US will be used by domestic and foreign investors to screw the US public out of every dollar they can get from them before the country collapses.
If you are smart and ruthless you too can build a ship that will sail into the sunset as the shores of America sink beneath the waves.
If not, if you possess a conscience and sense of justice well, let's just hope you can tread water until Jesus comes back to save you.
You can bet your local politicians won't be doing that job.
hey Im a boat / ship builder ,
GOT WORK ?
Also call Chris Dodd, he's in charge of the Senate Banking Committeee, but Wall Street is in charge of him.
He's got an election coming up. A progressive needs to run against him in the primary.
Nick Baumann, Mother Jones here
Has Dodd had a near (political) death conversion? Who is to say.
When it becomes too patently obvious that these guys are 'made men' for and by the Wall Street Mafia, maybe some of them will start to bite the hand that bribes them. If they figure they will lose the election AND if they don't want a job with the Mob afterwards…
But I am not holding my breath, the system is broken.
baselinescenario.com
I like many things Simon said on Bill Moyer's Journal, but I just hate the fact he worked for the International Monetary Fund. The IMF is nothing but a tool to take advamtage of weak economies and funnel money back to Wall Street.
>> "They make the campaign contributions. They shape agendas in ways that are that are really quite scary."
What major problem is there that is not the fault of special interest groups buying politicians?
Campaign Finance Reform.
Love of election funds is the root of all evil politicians.
... point of view.
I think we can all help this thing resolve by allowing it to completely crash. Only by refusing to participate in a crooked system can it be starved of the life blood of money it needs to live. Just hold back on any purchases, including real estate which is being kept artificially high by the banksters. (They're holding foreclosed properties back from sale to keep the numbers down and the values up).
Just say no. We outnumber them. They can't run their scam without the active participation of the American People. We have no leadership. We have very few people on our side. So what say.
October 29th is coming. It's a Thursday. It's the anniversary of Black Friday of the 1929 type. There is a call out for a General Strike of the USA on that day. Just stay home. Don't spend a DIME. Don't drive, don't shop, don't spend on ANYTHING. Just disappear and see how much of a dent we can make in their psyches. We can get back together on Friday and remonstrate about the event. Remember NOT EVEN AN EMAIL ON THURSDAY. HANG TOUGH. FREAK THEM OUT. Let's get the word out okay?
I voted for Obama. He is still the best choice given the two options.
But this utter failure to do a single thing about Wall Street is now a disaster of his making. Obama is no leader. He's weaseling out of his responsibility to fix the problem, and punish the perpetrators. The next collapse is all his.
And it saddens me to have to say it. I voted for Obama too.
But then again, was there any other choice?
If this admin does not undo the:
Depository Institutions Deregulation and Monetary Control Act of 1980, Garn-St. Germain Depository Institutions Act, Basel Accord, Sarbanes-Oxley, Gramm-Leach-Bliley Financial Services Modernization Act
the next collapse is inevitable, and WILL BE all his.
What is being done now to correct the lack of financial oversight?
"Come on guys, we said 'please'...."
For me, the best part of this very depressing NOW episode was Simon Johnson's call for more muckrakers to keep the pressure on Wall Street. It made me think that healthcare reform shouldn't be allowed to overshadow our dire financial straits, and aren't the two problems at least tangentially related?
I'm not so sure we've missed the chance for real reform.
Many people are expecting a second wave of foreclosures that could be so severe as to bring on another Depression. Real reform could come then, but not necessarily in time to prevent another Depression.
Both of Mr. Moyer's guests were very clear on the fact that this current climate is a direct off-shoot of the 80s S & L bailout, and we cannot have any meaningful reform while the foxes are controlling the henhouse.
So the first step is a major housecleaning-starting with the White House. Johnson and Kaptur urge Obama to follow Lincoln's example and get new financial 'generals'. I haven't seen any signs of that happening yet.
I was at Nationsbank, then in the process of becoming Bank of America as a lowly clerk, during that late 80's early 90's. I remember the president of the bank calling a meeting around 1997, and everyone was invited including clerks. He kept going on and on about a new "paradigm" in banking, but I wasn't sure if he knew the meaning of the word. It seemed to be primarily about charging fees for services customers used to get for free.
Than at one point he was talking about going into more stocks and bonds services for the customers, and at my next opportunity to ask a question I asked about Glass Steagall Act. He hedged, hemmed and hawed, and then acted like he wasn't sure what the Act was. I also asked about the advisability of charging fees for services that had been free.
After the meeting even some fairly high muckity-mucks congratulated me for having him on the ropes. But within 6 months later I was "fired with cause," and only recently have I seen the connection between the two events. A short time later the Gramm-Leach-Blily Act was passed.
But with ray gunn destroying the S&L's you're of course referring to The Financial Institutions Reform Recovery and Enforcement Act of 1989. But repugs would have us all believe it was all about Whitewater (even ignoring the Silverado S&L of the neil boosh).
http://www.youtube.com/watch?v=MJJN9qwhkkE
That movie is a classic, and one I MAKE the entire family watched every Thanksgiving after turkey dinner. Funny thing, the last few years most of guests have had to leave early and have missed watching this amazing film again.
(I think my kids can quote the entire movie.)
George Bailey is my fantasy businessman.
This time it's called "Prime" , not "sub-prime." In other words, because the economy and employment has been screwed up because of the first wave (Sept/Oct 2008) now we have prime mortgage defaults because people who had legit loans now can't pay.
There's also the Commercial real estate problem which will make all this non commercial look like a piker.
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