Robert Reich

Robert B. Reich, a co-founder of The American Prospect, is a Professor of Public Policy at the Goldman School of Public Policy at the University of California at Berkeley. His website can be found here and his blog can be found here.

Recent Articles

The Only Way to Prevent Another Bailout of Wall Street is to Cap the Size of Wall Street's Big Banks.

The best way for Senate Dems and the White House to respond to the Republican charge that the Dem plan for financial reform doesn’t go far enough to prevent another bailout is to call their bluff — and simultaneously do what’s necessary to avoid another bailout: Cap the size of big banks, as the UK is close to doing for its big banks. The so-called resolution mechanism the Dems are pushing to wind down any big bank that gets into trouble is a step in the right direction. But it won’t work if two or more giant banks are endangered at the same time — which is likely to be the case when the next crisis occurs because every big bank uses whatever profitable financial ploys every other bank uses (as they did in the run-up to the crash of 2008). Furthermore, as I’ve noted before, as long as the big banks are allowed to be huge and become even bigger, their political clout in Washington will remain huge and become even bigger. And as long as they have this kind of clout, they’ll wangle a...

Break Up the Banks.

A fight is brewing in Washington – or, at the least, it ought to be brewing – over whether to put limits on the size of financial entities in order that none becomes “too big to fail” in a future financial crisis. Some background: The big banks that got federal bailouts, as well as their supporters in the administration and on the Hill, repeatedly say much of the cost of the giant taxpayer-funded bailout has already been repaid to the federal government by the banks that were bailed out. Hence, the actual cost of the bailout, they argue, is a small fraction of the $700 billion Congress appropriated. True, but the apologists for the bailout leave out one gargantuan cost — the damage to the economy, which we’re still living with (witness the latest unemployment figures). Leave it to the Brits to calculate this. Andrew Haldane , Bank of England’s Financial Stability Director, figures the financial crisis brought on by irresponsible bankers and regulators has cost the world economy about...

Don't Wait for Reform

There's already a law on the books that holds Wall Street CEOs and executives to account -- now it needs to be enforced.

Former Treasury Secretary Hank Paulson admitted in his recent memoir that Lehman Brothers' balance sheet was bogus before the bank collapsed in 2008. Nonetheless, Lehman paid out $5.2 billion in bonuses in 2006 and $5.7 billion in 2007. Lehman's investors lost a fortune, of course. But Paulson doesn't extend his logic to its natural conclusion. Lehman's practices weren't all that different from those of every other big bank on Wall Street. Lehman was just the first to go under, causing a financial run that led George W. Bush to warn "this sucker could go down" unless the federal government came up with hundreds of billions to bail out the remaining banks. It should be obvious that the bailouts concealed the other banks' bogus balance sheets -- thereby covering their assets and their asses. We now know, for example, that Goldman Sachs along with a few other banks helped Greece hide its public debt and then placed financial bets that Greece would default, using "credit-default swaps" to...

Why the President's Next Big Thing Should Be Jobs.

Few presidents get a second honeymoon of their own making. Barack Obama ’s victory on health-care reform has breathed new life into his administration, recharged the Democratic base, and given the rest of America a sense of someone who fights for average working people. The question now is: What does he do with his second honeymoon? Some say it should be used to enact financial reform. Most Americans despise Wall Street and want to be assured there’s no repeat of the grotesque sequence of river-boat gambling with the economy followed by a taxpayer bailout followed by seven-and eight-figure bonuses. Democratic strategists would love to let Republicans hoist themselves on their own petard by defending Wall Street. Financial reform surely needs bucking up. The bill passed by the House last year was riddled with loopholes, delays, and cop-outs for the Street. The one that’s emerging from the Senate Banking Committee is only slightly better. It still allows a world of unregulated...

The Final Health-Care Vote and What it Really Means.

It’s not nearly as momentous as the passage of Medicare in 1965 and won’t fundamentally alter how Americans think about social safety nets. But the likely passage of Obama ’s health-care reform bill is the biggest thing Congress has done in decades and has enormous political significance for the future. Medicare directly changed the life of every senior in America, giving them health security and dramatically reducing their rates of poverty. By contrast, most Americans won’t be affected by Obama’s health-care legislation. Most of us will continue to receive health insurance through our employers. (Only a comparatively small minority will be required to buy insurance who don’t want it, or be subsidized in order to afford it. Only a relatively few companies will be required to provide it who don’t now.) Medicare built on Franklin D. Roosevelt ’s New Deal notion of government as insurer, with citizens making payments to government, and government paying out benefits. That was the central...

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