Putting Out Fires, Starting New Ones

The failure of government regulators to anticipate the financial crisis and their continued failure to deal with its fall-out has been a noted flashpoint for partisans on both sides of the aisle. The dominant narrative assumes that most observers were content to stand idly by and reap the benefits of corporate largesse while the “getting was good”. It’s true, some saw the signs and did their best to sound the alarm, but in the great tradition of American politics, these Cassandras went unheeded. And if the developments of the last year and a half are any indication, we’re no closer to fixing the problem than we were at the start of the crisis, because as of yet our leaders have been unwilling to make the hard decisions required of them. In the meantime, we suffer from record levels of unemployment, saddled by mounting debt, and with little hope that the culprits will actually be held accountable. All this begs the question, what lessons if any have we learned from this crisis? Former Governor Eliot Spitzer does just that in this month’s issue of the Review, in his piece for the New Democracy Forum, “The Rules.” Read the rest of this entry »

Welcome to Pottersville

“Something is rotten in the state of banking.” Alright, that isn’t quite how the Bard put it, but you take my point. Our nation’s ongoing financial crisis – just shy of a year in the making – is far from over. Indeed, with unemployment and budget deficits at record highs (the ‘worst since the Great Depression’, as the official administration line goes) it seems like we’ve just skimmed the surface and Americans are madder than they’ve ever been – a point about which congressional Democrats, with eyes fixed on 2010, are rightfully nervous. But even as populist anger has surged in the months since the first bank bailouts, there is scarcely a consensus about how lawmakers ought to proceed – that is, to curtail the excesses of the banking industry and its ability to send shockwaves through the larger economy. Of course, there are some (particularly on the right) who would take issue with the problem, stated as such, but as the evidence mounts it’s becoming harder to ignore the implications – that, as Dean Baker concludes in his recent piece, “The Big Bank Theory”, the complicity of the banking industry is incontrovertible and regulation is not merely prudent, but necessary.

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