Obama's senior economic adviser Daniel Tarullo hosted a conference call on the candidate's economic speech today, in which Obama proposed a second economic stimulus package of $30 billion as well as stronger regulation of the country's financial system in order to prevent another housing crisis. The second stimulus package would include a $10 billion foreclosure prevention fund, $10 billion in immediate relief for state and local governments dealing with the crisis, and an extension of unemployment benefits. Tarullo characterized the measures as "timely, targeted, and temporary," and emphasized the importance of reforming the financial regulatory system in general. Obama is also calling for a financial advisory group composed of people from outside the government to advise the president and Congress on the state of financial markets and the risks that are developing down the road. "Financial regulators understandably get caught up in the problems and issues of the moment, they oftentimes don't anticipate what the next problem is going to be," said Tarullo.
Tarullo is an interesting figure, having served in the Clinton administration as the deputy assistant to the president for economic policy as well as the assistant to the president for international economic policy. Here are some of his other remarks from the call, in which he criticized regulatory actions of the '90s:
It was apparent during the last significant set of changes in our financial laws, the Gramm-Leach-Bliley Act in 1999, that the exercise in Washington was essentially an exercise among the different interest groups of financial institutions [...] They were the ones who were at the table, they were the ones doing the negotiations. Thus perhaps it's not surprising that while the Gramm-Leach-Bliley Act stripped away some of the regulations which were clearly outmoded [...] that act did not substitute or did not even create the path toward substituting an effective financial regulatory system to deal with the kinds of financial instruments [...] such as we now see [...] or the mega financial institutions.
Tarullo also offered criticism of the economic proposals of the other candidates:
McCain this week gave an interesting speech, but one that was essentially backward looking -- "Here's my views about how some of the problems evolve." But he didn't say what he's going to do now. Sen. Clinton added a proposal to have a commission to see whether some of the other things that she's proposed would work. Well, Sen. Obama, a year ago when maybe there was some time to take a top-down survey and see what the views should be, he proposed to Sec. Paulson and Chairman Berneke a commission with a broader membership about a year ago. Now he believes the focus should be taken precisely so we can stop that downward spiral.
--Kate Sheppard
