Thursday, April 30, 2009

politics wins over economics every time

From Yglesias:

"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."


  1. Don the libertarian Democrat Says:

    “March 25, 2009

    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.”

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