Robert Johnson

Robert Johnson, formerly the chief economist of the Senate Banking Committee, is the director of global finance and senior fellow at the Roosevelt Institute in New York and the executive director of the Institute for New Economic Thinking.

Recent Articles

Reform and Its Obstacles

There is no mystery about how to simplify the financial system. The main obstacles are political.

(Pete Souza/White House)
Eighteen months into the greatest economic crisis since the Great Depression, the United States government has not enacted significant financial reform. Nor is the legislation now pending in Congress likely to deliver the profound change we need. When the U.S. Treasury secretary tells us that the bailouts of large complex financial institutions, however distasteful, were necessary to save the economy, he is telling us two things -- one spoken and one unspoken. He explicitly states the need to give these behemoths taxpayer funds because if large institutions are allowed to fail, we will get dragged down with them into a depression. What's not stated clearly is that these spillovers from finance to the larger economy are also grounds for very substantial financial regulation prior to the onset of a crisis -- the proverbial ounce of prevention. We need new laws and a new regulatory ethic to arrest the dominance of a financial sector that looms too large on our economic landscape. No one...

The Rich and Powerful Can Avoid Risk

Managing and balancing risk in the future is an organic human problem, a political problem, and a problem of power. The question is how to remedy the fact that some players have the power to shift risks and to use the political process for insurance, while others do not.

From Five Ways of Looking at Risk . Recent discussions of the malfunction of Wall Street have centered on the role of statistical models that failed to accurately account for all possible outcomes. These less likely results, known as "tail risks," were underestimated by the models. Now the "quants" on Wall Street and academia have a new research agenda, which is to figure out how to fix those models. Telling the story in this way has a risk of its own. Focusing on inanimate abstractions and numbers diverts attention from the human conflicts and follies embodied in our current catastrophe. The challenges related to the distribution and management of risk are much more formidable than a technical fix because they are not technical problems. Managing and balancing risk in the future is an organic human problem, a political problem, and a problem of power. The question is how to remedy the fact that some players have the power to shift risks and to use the political process for insurance...