Today, the Huffington Post sent out a clip of an interesting essay by former IMF Chief Economist Simon Johnson challenging Treasury Secretary Tim Geithner’s take on financial reform.
The essay also appeared at Johnson’s must read personal blog, Baseline Scenario.
Simon Johnson wrote:
Geithner is completely wrong if he thinks the financial reform bill now before Congress “has teeth.”
There is simply nothing there that will rein in our largest financial institutions — and you can see this in the financial markets. And as a symptom of these continuing problems, see the latest round on executive pay at banks — we’re back to cash and other short-term oriented payouts.
This administration recognizes that such incentives are dangerous — particularly when combined with implicit government guarantees. But they can do nothing — and will do nothing — about this or about the deeper underlying issues.
Simon Johnson is almost unique in town because as an intellectual who rose to the highest ranks at one of the world’s key institutions promoting global neoliberalism, Johnson is not supposed to engage in such direct assaults on brethren in related institutions — like the Department of Treasury. Johnson is breath of fresh air in the field, as of course are Joe Stiglitz, Rob Johnson, Desmond Lachman, and some others.
Simon Johnson will be speaking at a notable forum at the University of Cambridge in the UK next week for the launch of the Institute for New Economic Thinking headed by economist Rob Johnson and funded by George Soros.
I recommend that folks get their orders in for Simon Johnson’s book that is today at #19 on Amazon titled 13 Bankers: The Wall Street Takeover and the Next Financial Meltdown.
I will be at this Cambridge meeting reporting back for TWN, Foreign Policy magazine, and perhaps some other publications. Much of the program at the several day long conference will stream live here at The Washington Note.
— Steve Clemons
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