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David Leonhardt interviews the president, and it's all quite interesting. But I know you want to read about banks and, if possible, Larry Summers and Tim Geithner, so let me flag this selection for your attention:
THE PRESIDENT: Not entirely. But, I mean, the fact is that Larry Summers right now is very comfortable making arguments, often quite passionately, that Bob Reich used to be making when he was in the Clinton White House. Now Larry might not like me saying that —Larry Summers is the new Bob Reich —THE PRESIDENT: — that he’s become a soft touch. But, no, I think that one of the things that we all agree to is that the touchstone for economic policy is, does it allow the average American to find good employment and see their incomes rise; that we can’t just look at things in the aggregate, we do want to grow the pie, but we want to make sure that prosperity is spread across the spectrum of regions and occupations and genders and races; and that economic policy should focus on growing the pie, but it also has to make sure that everybody has got opportunity in that system.I also think that there’s very little disagreement that there are lessons to be learned from this crisis in terms of the importance of regulation in the financial markets. And I think that this notion that there is somehow resistance to that — to those lessons within my economic team — just isn’t borne out by the discussions that I have every day.If anything, the only thing I notice, I think, that I do think is something of a carry-over from Bob Rubin — I see it in Larry, I see it in Tim — is a great appreciation of complexity.And a willingness to admit what you don’t know, in many cases.THE PRESIDENT: Yes, exactly. And so what that means is that, as we’re making economic policy, I think there is a certain humility about the consequences of the actions we take, intended and unintended, that may make some outside observers impatient. I mean, you’ll recall Geithner was just getting hammered for months. But he, I think, is very secure in saying we need to get these things right, and if we act too abruptly, we can end up doing more harm than good. Those are qualities that I think have been useful.A few things here. Though Summers has moved a good deal further left than his critics would give him credit for, it is also very clear that whatever the situation was in 1993, today he and Reich are still making very different arguments. (Luckily, Jared Bernstein is also in the mix). I do think that Obama's equation of a Reich-style world view with being a "soft touch" is silly, and in keeping with a discredited economic ideology that certainly, and unfortunately, still exists in Democratic politics. Another point: there is certainly disagreement about the lessons of this crisis with respect to regulation, with many experts suggesting that increased regulation alone is not enough to address the problems of the financial sector; rather, the big banks need to be broken up into smaller institutions. While the president does touch on that at one point, suggesting (predictably) a balance between smarter regulations for investment banks but perhaps a prohibition on some of the truly exotic financial institutions that came up in the last few years (his example is AIG's financial products division), I wonder if he really has been confronted with the bolder ideas about anti-trust action in the financial sector. Finally, there is the continual concern about the complexity and unintended results of a more aggressive response to the financial crisis. This is a persuasive argument that I often hear when I talk to experts on these issues, but given the amount of criticism coming at the president's plan I wish he -- or anyone from his administration -- would go into more detail about the potential successes and problems that would come from both their plan and some kind of national receivership option.
-- Tim Fernholz
