Simon Johnson talks about corruption and the rule of law

Simon Johnson recently spoke about corruption and the Rule of Law with Art Buono of Lawyers.com:

Art Buono: Simon, thanks for taking part in the Rule of Law Interviews. So, just to start, could you tell us a little bit about what’s happening with financial reform? It’s been about a year since “13 Bankers” was published. And you’re a warrior right on the front lines there. What’s going on, on the battleground? And who’s winning?

Simon Johnson: Well you know it’s obviously – it’s going to be a long haul to change the relevant rules and power structure around these issues. But I’m fairly optimistic at this point, for a couple of reasons. First of all, the academic community, which is you know typically not fast to these debates, but when it comes, it comes forcefully and with a lot of substance, these people are very engaged now, particularly around the issue of capital requirements.

So Professor Anat Admati of Stanford is both leading the way with her research and policy interventions, but she’s also bringing a lot of top finance people with her. I was on a panel at the American Finance Association meetings in Denver recently with Rene Stultz, John Cochrane, Raghuram Rajan, and Myron Scholes, all of whom are top finance people. And we had a couple hundred people in the room. And I would say there was largely agreement on the issues that Anat and her colleagues are putting forward, which – the bottom line which is that banks need to have much higher capital requirements than is currently in the cards. So that’s one good thing.

The second good thing is that the non-financial sector is beginning to wake up to the problems posed to it by the too-big-to-fail banks, and actually they’re running ads against those banks right now with regard to swipe fees. …

Read the full interview at Lawyers.com

Simon Johnson is Ronald A. Kurtz (1954) Professor of Entrepreneurship and Professor of Global Economics and Management

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