How would democratic presidential hopefuls reform Wall Street? — Simon Johnson

MIT Sloan Prof. Simon Johnson

MIT Sloan Prof. Simon Johnson

From Moyers & Company

In recent years, parts of the financial sector have behaved badly — and holding the relevant executives accountable has not been a strong suit of the Obama administration. So financial reform is an important issue for the country, and whoever wins the Democratic Party presidential nomination will find that it resonates with many voters in the general election.

Former Secretary of State Hillary Clinton, Senator Bernie Sanders, and former Maryland Governor Martin O’Malley have each put forward detailed and specific plans, including more action by the Justice Department.

All of them also agree that the 2010 Dodd-Frank Act moved some issues in the right direction but there remains a substantial and important, unfinished agenda. The principal disagreement among the three camps comes down to this: what is the structural problem with our financial system, and how should we fix it?

Senator Sanders and Governor O’Malley correctly point out that in recent decades some banks became very large and the crisis did nothing to shrink their balance sheets. These banks are commonly and accurately regarded as “too big to fail,” meaning that they benefit from an implicit government guarantee. This is a dangerous and unfair subsidy.

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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

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 Read More »