Goodbye to Berlin
August 30, 2010
In early February, the top financial officials of seven major industrialized countries gathered in Canada to mull the state of the world economy. To grease their interactions, the Canadians had created an intimate setting in Iqaluit, an Inuit town near the Arctic Circle. A planning document waxed on about fireside chats at a cozy inn and decreed that the attire would be casual.
January 15, 2010
Otherwise-obscure central bankers spent an unprecedented amount of time in the global limelight last year. As the crisis brought down not only banking behemoths, but also macroeconomic axioms, the expansionary measures enacted by the Fed’s Ben Bernanke, the European Central Bank’s Jean-Claude Trichet, and the Bank of England’s Mervyn King have been credited, at least for now, with preventing a second coming of the Great Depression.
America's Economic "Doom Loop"
November 17, 2009
“Banking on the State” by Andrew Haldane and Piergiorgio Alessandri is making waves in official circles. Haldane, Executive Director for Financial Stability at the Bank of England, is widely regarded as both a technical expert and as someone who can communicate his points effectively to policymakers. He is obviously closely in line--although not in complete agreement--with the thinking of Mervyn King, governor of the Bank of England. Haldane and Alessandri offer a tough, perhaps bleak assessment.
Can Limits on Executive Pay Solve the Too Big To Fail Problem?
October 23, 2009
On Wednesday, Dan Tarullo, a governor of the Federal Reserve and distinguished law school professor, dismissed breaking up big banks as “more a provocative idea than a proposal” and instead put almost all his eggs in the “creation by Congress of a special resolution procedure for systemically important financial firms.” He stressed: “We are hopeful that Congress will, in its legislative response to the crisis, include a resolution mechanism and an extension of regulation to all systemically important financial institutions” (full speech). This put him strikingly at odds with Mervyn King, gove
The Consensus on Big Banks is Beginning to Crack
October 21, 2009
Just when our biggest banks thought they were out of the woods and into the money, the official consensus in their favor begins to crack. The Obama administration’s publicly stated view--from the highest level in the White House--remains that the banks cannot or should not be broken up. Their argument is that the big banks can be regulated into permanently low risk behavior. In contrast, in an interview reported in the NYT this morning, Paul Volcker argues that attempts to regulate these banks will fail: “The only viable solution, in the Volcker view, is to break up the giants.