Comments on: Remember Chuck Prince!

By: Consumer Protection When All Else Fails (Written Testimony) « The Baseline Scenario

Wed, 20 May 2009 10:03:35 +0000

[...] about their bank failing in a manner that is synchronized with other banks. These bank executives have a strong incentive to copy the actions and policies of other big [...]

By: Monday links: fear and regret | HeatUp.com - Internet News

Monday links: fear and regret | HeatUp.com - Internet News — Wed, 20 May 2009 02:06:32 +0000

[...] If you support bank regulation, “you need to push for it now.” (Baseline Scenario) [...]

By: KK

KK — Tue, 19 May 2009 21:36:38 +0000

The strategy is very obvious… If you change the management of the Banks the new ones will expose how much trouble they are in.. So the management remains the same to shield the facts… The Government funds the liquidity crisis.. (Meaning bail out the share holders).. And the economy recovers… Everybody goes home and is a winner except the Tax Payers… Who cares for them…

By: Regulating Our Brave New Post-Stress Test World - The Plank

Regulating Our Brave New Post-Stress Test World - The Plank — Tue, 19 May 2009 15:57:54 +0000

[...] [Cross-posted at The Baseline Scenario.] [...]

By: Mark

Mark — Mon, 18 May 2009 22:15:47 +0000

On what planet is the Capital Assistance Program NOT a “big recapitalization program”? It’s one thing to disagree with the administration’s approach to the banks, but it’s quite another to simply ignore the administration’s existing programs.

And has Simon Johnson ever cited a specific financial regulation that he supports, and which is in danger of not being implemented? I guess vague platitudes about the need for “more regulations” and some mysterious and undefined “financial oligarchy” is just Johnson’s shtick. It’s kind of sad that people still consider this guy an expert.

By: Franconomics

Franconomics — Mon, 18 May 2009 18:04:02 +0000

Prof. Johnson,

Are you sure there is risk of regulatory over-tightening? I think not.

Friedmenites like Summers are neo-Friedmenites, that is all. Greed is still king, and business schools will take their time to look and teach “beyond greed.” (Some) Congressmen hit their heads on the walls that Dr. Summers hates construction or that Dr. Summers hates manufacturing — and we see the results, Chrysler is allowed to go bankrupt and take down 789 dealerships, GM on its way to bankruptcy is taking down 1100 dealerships, yet creme-de-la-creme banks like Goldman which would have gone bankrupt sans the 10 billion dollar TARP plus the $12.8 billion dollar TARP derived AIG handout, paid nice bonus to execs in 2008 and boldly proclaimed recently that the 2009 bonus will match the 2008. Car salesmen will lose their jobs, but Dr. Summers will try to save as many bank jobs as he can. The average American thinks that the car salesman is a conman. But these sales folks are really gullible people compared to the sophisticated bankers and their planted reps at all levels of the administration…

Now, I read some financial engineering in MIT Sloan while pursuing my MBA there 9 years ago, and you can listen to my views in my last weekly which aired less than 12 hours ago at — http://tinyurl.com/q2gt2t — in this weekly podcast, I have suggested to the Administration that reform should be both a bottom up and a top down approach — pull back the Goldman bonus for 2008 by taxing it at 100% and return the money to the taxpayers.

You can also read my article where I have shown that the actual bailout ($8.7 trillion) + stock-market handout ($5 trillion) is equivalent to the American economy / GDP of $14 trillion dollars. I call it the 14 trillion dollar value drain (similar to value chain analysis of Porter, except that instead of creating value, the banker parasites drained value), and the article is located at http://www.franconomics.com/fourteen-trillion-dollar-value-drain-II.html

I found that you are now an economic advisor to Congress. Keep pushing the agenda that radical reform demands that bank executives get NO BONUS, and that includes top (Goldman) to bottom (Citi)…

Best regards,
Sam, MBA (MIT Sloan)

By: MrM

MrM — Mon, 18 May 2009 18:00:58 +0000

The correct name of this policy should be “win-win-wink”

By: al

al — Mon, 18 May 2009 17:40:52 +0000

Please excuse my error. I mean to type “Thanks for an excellent post, Mr. Johnson”

By: al

al — Mon, 18 May 2009 17:39:12 +0000

Thanks for an excellent post, Mr. Simon.

I read “page 5″ and am absolutely delighted that Bill Gross of Pimco is excited about the “potential for double digit returns” for his firm.

And I’m simply ecstatic that BlackRock is “exploring” the creation of mutual funds that (after nominal management fees and expenses) will allow individual investors like me to share in this “win-win-win policy”.

WOO HOO!

By: The Raven

The Raven — Mon, 18 May 2009 16:53:10 +0000

Isn’t this a new kind of Hooverism? Or maybe just Hooverism, all over again–I’m not sure of the history. Fund the banks, then discourage them from lending the money out where it would be most useful?

By: MrM

MrM — Mon, 18 May 2009 16:09:06 +0000

There cannot be any meaningful regulatory reform without a thorough analysis of what went wrong in the past 10-15 years and what were the main causes of the current crisis. There are many explanations today: too many regulators, lack of will to apply existing regulation, lack of true independence by the regulators, cross-broder regulatory and tax arbitrage, lack of systemic risk regulation, unchecked securitization, unchecked rating agencies, bank compensation structure, over-reliance on mathematical models, excessive liquidity injections by the Fed, etc.

Doesn’t one need to understand what to reform before launching the reform?

By: Elwood Anderson

Elwood Anderson — Mon, 18 May 2009 16:06:57 +0000

The financial oligarchy runs this country. One of their own is running Treasury and as Dick Durban recently said, they own congress. Under these circumstances re-regulation is a pipe dream. Why keep harping on it. It’s not going to happen. Pundits should spend their time discussing ways to defeat the oligarchy. This is a political problem at the grass roots level. At this point nothing short of a full on depression that punishes every voter will result in any change in the status quo. This time the populists are right. It’s time to bring out the pitchforks.

By: tippygolden

tippygolden — Mon, 18 May 2009 16:05:50 +0000

The bankers and board members at the helm leading into this banking crisis should — not be allowed — to keep their jobs. If they are not fired they should do the right thing and retire.

By: Options Trading

Options Trading — Mon, 18 May 2009 16:05:43 +0000

yes, it’s a dilemma, that’s why we must think carefully about it.

By: Dr. Frankie

Dr. Frankie — Mon, 18 May 2009 14:41:02 +0000

Searching Lexus-Nexus, Google and other engines, I couldn’t come up with ONE instance where either a journalist (a rare specimen today, among all the ditto-heads) a regulator or a Congressperson has publicly ask Treasury or the Fed, WHY current management of the big banks are still sitting in their corner office.

The government does not suffer from regulatory capture; it’s more like mind control by the financial industry.