Federal Deposit Insurance Corporation
In the months since Occupy Wall Street pitched its first tents last September, one criticism of the movement has been that it does not offer much in the way of solutions. Enter Occupy the SEC, an Occupy offshoot made up of activists and veterans of the financial sector. Instead of taking the public stand of OWS, they’re using a different tactic: They’ve written a detailed 325-page analysis of the Volcker rule. And, in my view, they’ve got it exactly right. First, some background.
Have any plans for this Saturday? The nearly 100,000 people who have pledged to take part in Bank Transfer Day certainly do: closing their bank accounts. The idea is to punish “Too Big to Fail” banks by instigating a mass exodus to smaller credit unions and community banks. Though not technically affiliated with Occupy Wall Street, it’s a practical expression of the anti-bank anger the movement has wrought. But if the executives at the country’s biggest banks have circled Bank Transfer Day on their calendars, it's probably not out of anxiety.
Discussion of the House Republican budget has focused mostly on the privatization of Medicare, the block-granting of Medicaid, and the repeal of the Affordable Care Act. And that’s appropriate, given the magnitude of the changes and widespread impact they would have. But those proposals are obscuring some other proposed shifts that, in any other context, would be plenty troubling for their own sake. This week I'll highlight five of them. On Monday, I talked about radical changes to the Supplemental Nutritional Assistance Program (SNAP).
There were many factors that led us to the financial crisis of 2008—dangerous derivatives, irresponsible ratings agencies, negligent regulators—but one was more important than the rest. We now know it as the “too big to fail” problem. What brought the economy to the edge of disaster wasn’t only that financial institutions had made rash bets on lousy investments, but that those institutions were so massive that when their bets went bad, they threatened to take the rest of the economy down with them.
My TRB column on Frank Luntz has raised the hackles of National Review's Kevin D. Williamson, who has an incredulous response entitled, "Yes, Jonathan Chait, It's a Bailout Bill." I should first note that my column was primarily about Luntz, and only secondarily about Luntz's bizarre notion that financial reform would cause bailouts. Bailouts, of course, are essentially the current default policy. We had a huge bailout in large part because there was no regulation or process to avoid them.
In my column today, I posed the question of whether the Fed’s infusion of cash, and near-zero interest rates were inspiring bank lending to businesses. On the basis of the Fed’s quarterly interviews with loan officers, I concluded that its measures had not. Today, there is further evidence – from the Federal Deposit Insurance Corporation (FDIC) quarterly report on bank practices. According to the FDIC, commercial and industrial loans declined by 6.5 percent from the second to third quarter of 2009 and by a whopping 15.1 percent from the third quarter of 2008. That suggests, again, that the nor
If you haven't picked up on one of the dozens of recommendations from other blogs, I recommend reading Phillip Swagel's long and detailed account of the view of the financial crisis from his seat as assistant secretary for economic policy at the Treasury Department. It's particularly useful for people like me who make a habit of criticizing government officials. The writing is dry, but much of the subject matter is fascinating. It often explains or defends Treasury's actions during the crisis, but Swagel certainly owns up to plenty of mistakes or shortcomings.
As the United States faces its biggest economic crisis since the Great Depression, Barack Obama and his team have been looking to Franklin Delano Roosevelt for help. The influence so far is obvious: The stimulus measure passed by Congress in February includes money for building infrastructure, strengthening unemployment insurance, and helping state governments--all reminiscent of FDR's New Deal. It is now necessary for Obama to take the model one step further.