Christy Romer, chair of the President’s Council of Economic Advisers, will appear before the Joint Economic Committee tomorrow. (Details, background, and links to Christy’s relevant recent work will appear on The Hearing shortly; update, now posted).
I suggest Committee members consider pursuing the following lines of questioning.
- Please explain precisely how the U.S. will avoid the type of “balance sheet” recession seen in Japan during the 1990s? Building on that, kindly elaborate on why this kind of recession is not an issue at the global level. Related to this, what is your view of the IMF’s latest global forecast, for example for Western Europe?
- Larry Summers argues that growth in the recent past was overly based on the financial sector and there is now a need to rebalance the economy, led by public investment. Do you agree with this view and which public investments – and related private sector activities – exactly would you have in mind? How /why will resources move out of the financial sector, given the level of bailouts (i.e., insurance for bankers’ bonuses) today and promised for the future?
- The Administration indicates that it wants to reform the way finance is regulated. Regarding the past two decades, would you agree that the financial sector has proved able to “capture” regulators and to resist rules (e.g., on derivatives) that would restrict potential profitability? If yes, how exactly do you think future regulators (e.g., the system regulator now under discussion) will resist similar capture?
- Do you support the idea of applying and updating antitrust principles to banks that are “too big to fail”?
- What other approaches make sense for dealing with big banks in the future? Do you agree that controlled financial system risk creates serious potential for huge unpleasant fiscal surprises? Could Pecora-type hearings be one way to examine how best to bring down these risks?
Feel free to add more questions here or at The Hearing at WashingtonPost.com. The JEC is definitely interested in what you have to say.
By Simon Johnson