On CSpan this morning is Simon Johnson, an economist who knows stuff. He referred to the regulatory apparatus in the U.S. as Byzantine. He said that when AIG was moving into reckless territory and inventing all those interesting new ways of conducting business, they went ‘regulator shopping’. And that was possible in the labyrinth of our system. Of course, many of the other big boys did the same thing.
Interestingly, Johnson keeps his own money in a community bank in Massachusetts and a credit union in D.C. He endorsed the Move Your Money movement. (Go here to find a bank/credit union in your area.)
Last night, PBS re-aired their Frontline documentary about Brooksley Borne, the only regulator (somewhere in FDIC) who warned the Federal government (in the 1990’s) about the new ‘credit default swaps’. Unregulated, she warned, they would destroy us. But that was an inconvenient warning for the trio at the top of the US system – Bob Rubin, Larry Summers (and Alan Greenspan). They put a stop to her right quick! Rubin’s deputy was Timothy Geitner. Bet these fellas are thrilled to be back in charge. (You can watch it at the link.)
Obama may have to answer for that.
But I’ll bet the troops in Afghanistan – and Yemen according to Michael Isikoff this morning – are a little too busy to follow the career paths of the nation’s eminent economists. Because they’re busy fighting a war on this 131st day of the ninth year of that war.