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Ezra Klein: April 18, 2010 - April 24, 2010

Reconciliation

Actually, gotta skip the links today because I'm late for something. But if you're desperate for more Klein commentary, I'll be on "Countdown with Keith Olbermann" at the beginning of the program tonight. Oh, and I was going to wish...

By Ezra Klein  | April 23, 2010; 5:40 PM ET  |  Permalink  |  Comments (7)
 
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The Affordable Care Act's spending and coverage in graphs

To better visualize the findings of the Center for Medicaid and Medicare Services report that has some Republicans in such a tizzy, here are two graphs using the report's data. The first looks at national health expenditures with and without...

By Ezra Klein  | April 23, 2010; 4:32 PM ET  |  Permalink  |  Comments (19)
Categories:  Health Reform  
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Why do Harvard kids head to Wall Street? An interview with an ex-Wall Street recruit.

One of the common complaints about Wall Street is that it sucks up a lot of Ivy League talent that could be going toward more productive endeavors. The common assumption is that the students are just following the money. But,...

By Ezra Klein  | April 23, 2010; 4:25 PM ET  |  Permalink  |  Comments (64)
Categories:  Interviews  
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USAA and financial regulation

A couple of you have asked me about USAA's strong opposition to any financial-regulation reform that includes the Volcker rule. USAA is a financial-services company that serves military families and that's structured in a fairly uncommon way: It's an insurer...

By Ezra Klein  | April 23, 2010; 4:00 PM ET  |  Permalink  |  Comments (11)
 
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Don't confuse banks that want profits with derivatives that need to be customized

I recently interviewed a former hedge funder who used to deal with the Goldman Sachs derivatives desk. He recalled that they were constantly knocking on his door with complicated derivatives trades that they'd construct on his behalf -- for a...

By Ezra Klein  | April 23, 2010; 2:37 PM ET  |  Permalink  |  Comments (9)
 
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Lunch break

As Ta-Nehisi says, this clip of Jay-Z and Beyonce performing "Young Forever" before thousands of screaming fans at Coachella is some good stuff....

By Ezra Klein  | April 23, 2010; 12:43 PM ET  |  Permalink  |  Comments (3)
 
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Don't cry for J.P. Morgan's profits

J.P. Morgan's fearless leader isn't a big fan of derivatives reform: Revenue lost by dealers could be significant. Research and advisory firm TABB Group estimates the top 20 dealers generate around $40 billion annually from privately-traded derivatives, excluding credit default...

By Ezra Klein  | April 23, 2010; 12:20 PM ET  |  Permalink  |  Comments (7)
Categories:  Financial Regulation  
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Curious why the Senate Agricultural Committee handles derivatives?

Here ya go: Because traders used to gamble with corn. A derivative contract, very briefly, is a bet on what's going to happen in the future. These instruments are now associated with interest rates, or with a company's creditworthiness, but...

By Ezra Klein  | April 23, 2010; 12:08 PM ET  |  Permalink  |  Comments (3)
 
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A health-care reform Rorschach test

I long ago learned that cost estimates are health-care reform's version of a Rorschach test: They tell you more about the reader than the bill. And the early reaction to the latest estimates (pdf) out of the Center for Medicaid...

By Ezra Klein  | April 23, 2010; 11:35 AM ET  |  Permalink  |  Comments (32)
Categories:  Health Reform  
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A history of forgetting

"Some on Wall Street forgot that behind every dollar traded or leveraged, there is a family looking to buy a house, pay for an education, open a business or save for retirement," President Obama said on Thursday. Steve Pearlstein doesn't...

By Ezra Klein  | April 23, 2010; 10:00 AM ET  |  Permalink  |  Comments (9)
 
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Is ideology a luxury good?

That seems to be the implication of these charts that political scientist Andrew Gelman posted. What you're seeing is self-described ideological orientation and self-described party affiliation measured against income. Gelman runs through his conclusions: 1. The alignment of income with...

By Ezra Klein  | April 23, 2010; 9:00 AM ET  |  Permalink  |  Comments (13)
Categories:  Political Science  
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Sen. Graham not ready to move to immigration

The buzz right now is that the Democrats mean to turn to immigration reform after financial-regulation reform. That's proving a surprise to even the legislators who want immigration reform, like Sen. Lindsey Graham. “What bill are we going to take...

By Ezra Klein  | April 23, 2010; 8:04 AM ET  |  Permalink  |  Comments (23)
Categories:  Immigration  
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DIY U

I went to not one, but two, colleges, and even so, I think it can be fairly said that the bulk of my education over that period came from Blog University, which I attended with much more enthusiasm and diligence...

By Ezra Klein  | April 23, 2010; 7:17 AM ET  |  Permalink  |  Comments (11)
Categories:  Education  
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Reconciliation

Today I explained derivatives (and more important, clearinghouses), wondered how FDR would reform Wall Street and talked with Chris Dodd about his financial regulation bill. Here's what I didn't get to: 1) Steve Mufson profiles hedge-funder John Paulson. 2) Riverdale...

By Ezra Klein  | April 22, 2010; 7:04 PM ET  |  Permalink  |  Comments (4)
 
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The uppers vs. the ultras

Matt Miller predicts the rise of intra-class warfare: For several years I've predicted that a new wild card in American life -- the presence of economic resentment at the bottom of the top 1 percent of our income distribution --...

By Ezra Klein  | April 22, 2010; 6:45 PM ET  |  Permalink  |  Comments (18)
 
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Democrats making reconciliation an option for jobs bills in 2011

I've been arguing for a while that the single most important thing Democrats could do on jobs would be to include reconciliation instruction in the 2011 budget so they can pass further jobs bills with 51 votes. Recent legislation has...

By Ezra Klein  | April 22, 2010; 6:21 PM ET  |  Permalink  |  Comments (1)
 
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The homes and people at the heart of the Goldman/Paulson deal

The article I'm about to link to was written by Carrick Mollenkamp, Mark Whitehouse and Anton Troianovski. They were helped by Stephanie Simon, James R. Hagerty, Serena Ng and Cari Tuna. I want to name names because the piece,...

By Ezra Klein  | April 22, 2010; 5:10 PM ET  |  Permalink  |  Comments (24)
Categories:  Housing Crisis  
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Reid files for cloture on FinReg

A vote could take place to move to the bill as early as Monday. This suggests a couple of possible outcomes: 1) Democrats and Republicans strike a deal over the weekend and there's no filibuster. 2) Democrats and Republicans don't...

By Ezra Klein  | April 22, 2010; 4:30 PM ET  |  Permalink  |  Comments (4)
 
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The problem of Wall Street profits

Matt Yglesias gets my point wrong here: The profits of Wall Street don't bother me for reasons of social justice or inequality. Rather, I don't believe you can effectively regulate the financial industry so long as it's sucking up...

By Ezra Klein  | April 22, 2010; 4:24 PM ET  |  Permalink  |  Comments (9)
Categories:  Financial Regulation  
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Explaining FinReg: Derivatives

I've been dreading this one. Derivatives are rough sledding. Explaining futures, options and swaps is the blogger's version of the Oregon Trail: It'll take months, and you'll probably lose most of your people along the way. Maybe to dysentery...

By Ezra Klein  | April 22, 2010; 3:26 PM ET  |  Permalink  |  Comments (8)
Categories:  Explaining financial regulation  
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Re: FDR

Commenter Donal Slovin splashes some cool water on the FDR comparison: This speech by FDR, obviously quite stirring, is frequently cited these days. As a caveat, it is worth noting a couple of points. First, the speech was given, at...

By Ezra Klein  | April 22, 2010; 2:31 PM ET  |  Permalink  |  Comments (5)
 
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Do we need a new $100 bill?

Noting Treasury's decision to make the $100 bill a lot uglier in order to make it a lot harder to counterfeit, Megan McArdle wonders whether we should actually be that worried about counterfeit currency: We don't use that much...

By Ezra Klein  | April 22, 2010; 2:26 PM ET  |  Permalink  |  Comments (32)
 
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Haikus and cartoons, together at last

Ted McCagg channels a sad Wall Street broker. In the real world, however, this guy is back to making millions and Justin Bieber will play the party....

By Ezra Klein  | April 22, 2010; 2:03 PM ET  |  Permalink  |  Comments (0)
 
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What would FDR do?

In 1936, Franklin Delano Roosevelt took the podium at Madison Square Garden to deliver a message to his critics. "We [have] had to struggle with the old enemies of peace," he said. "Business and financial monopoly, speculation, reckless banking,...

By Ezra Klein  | April 22, 2010; 12:55 PM ET  |  Permalink  |  Comments (36)
Categories:  Financial Regulation  
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Lunch break

As you'll see in an upcoming post, Barack Obama's speech at Cooper Union got me thinking about FDR's 1936 speech at Madison Square Garden. So here's a clip from that famed stemwinder....

By Ezra Klein  | April 22, 2010; 12:30 PM ET  |  Permalink  |  Comments (0)
 
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Should we wait for the world?

If you spend much time around the FinReg debate, you'll hear a lot of people saying that the only way forward is international action. There's a rationale for that: Banking is an international industry, and a bank can escape tough...

By Ezra Klein  | April 22, 2010; 11:45 AM ET  |  Permalink  |  Comments (4)
Categories:  Financial Regulation  
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The American Farm Bureau is afraid of interns

The quality of a lobby's argument is generally inversely proportional to their touchiness to debate. Lobbies that feel like they're on solid ground don't tend to freak out when, say, an intern somewhere writes a blog post that's skeptical of...

By Ezra Klein  | April 22, 2010; 11:16 AM ET  |  Permalink  |  Comments (9)
 
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Dodd: 'It's not size; we're preoccupied with size.'

Chris Dodd is chairman of the Senate Banking Committee and principal author of the financial regulation bill that the Senate will consider next week. We met at his Senate office Wednesday to speak about the makings of the financial...

By Ezra Klein  | April 22, 2010; 9:27 AM ET  |  Permalink  |  Comments (36)
Categories:  Financial Regulation, Interviews  
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What happens next for Lincoln's derivatives proposal?

Now that Sen. Blanche Lincoln's souped-up derivatives proposal has cleared committee and even attracted a Republican vote, Wall Street and the GOP are in much worse shape than they were a few weeks ago. Back then, there were three possible...

By Ezra Klein  | April 22, 2010; 7:34 AM ET  |  Permalink  |  Comments (18)
 
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Reconciliation

Today I looked at how fond both parties are of Wall Street's money, listed some ways you could make the filibuster less troublesome without ending it altogether and interviewed Sen. Ted Kaufman about his proposal to break up big banks....

By Ezra Klein  | April 21, 2010; 6:08 PM ET  |  Permalink  |  Comments (4)
 
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Sen. Ted Kaufman: 'We need to pass something so a similar crisis doesn't happen for another 50 years'

Earlier today, Sens. Ted Kaufman (D-Del.) and Sherrod Brown (D-Ohio) introduced the Safe Banking Act, a proposal to end the too-big-to-fail problem by ending too-big-to-fail banks. The legislation sets firm size limits and capital requirements and forces banks above...

By Ezra Klein  | April 21, 2010; 4:39 PM ET  |  Permalink  |  Comments (13)
Categories:  Financial Regulation, Interviews  
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Re: Wall Street's complexity

A reader sends in this story: Back when I was in law school (30 years ago, oy!), a group of friends and I started playing a regular poker game. Over the years, most of us stayed in the area. We've...

By Ezra Klein  | April 21, 2010; 3:32 PM ET  |  Permalink  |  Comments (8)
 
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Blanche Lincoln's derivatives proposal passes Ag Committee with Republican support

Blanche Lincoln's extremely aggressive derivatives proposal passed out of the Senate Agriculture Committee today. The expectation was that it would win on a party-line vote. And it did -- almost. But Iowa Republican Chuck Grassley surprised observers by joining the...

By Ezra Klein  | April 21, 2010; 3:25 PM ET  |  Permalink  |  Comments (12)
Categories:  Financial Regulation  
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Why you shouldn't buy a house in Vegas

Responding to David Leonhardt's argument that now is a pretty good time to buy a home, Ryan Avent offers an interesting counter. He notes that falling home prices are, in many cases, correlated with high unemployment. After all, if...

By Ezra Klein  | April 21, 2010; 2:34 PM ET  |  Permalink  |  Comments (7)
Categories:  Housing Crisis  
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Lunch Break

I was up in New York earlier this week and managed to eat at two separate David Chang restaurants: Momofuku noodle bar (terrific, though the ramen at LA's Daikokuya is better) and Momofuku Ma Peche (also very good). I actually...

By Ezra Klein  | April 21, 2010; 12:37 PM ET  |  Permalink  |  Comments (2)
 
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Mending the filibuster without ending it

Ruth Marcus has an excellent action plan for reforming the filibuster. Read it. I'd just echo one of the implicit points of her column and say that there are a lot of steps between here and elimination of the...

By Ezra Klein  | April 21, 2010; 12:09 PM ET  |  Permalink  |  Comments (16)
Categories:  Senate  
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Heads the banks win, tails they also win. And they win if you don't flip.

William Cohan explains how the banks have been making such extraordinary money after the crash: The benefits for Wall Street started with the extensive de-leveraging that continues the world over in the wake of the financial crisis (it caused) by...

By Ezra Klein  | April 21, 2010; 11:06 AM ET  |  Permalink  |  Comments (14)
 
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The right allows financial crises, the left handles financial crises

Or so argues political scientist Lawrence Broz in a new paper (pdf): Financial cycles of boom and bust are as old as finance itself -- a fact that has led some observers to infer that human nature may be a...

By Ezra Klein  | April 21, 2010; 10:32 AM ET  |  Permalink  |  Comments (28)
Categories:  Political Science  
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Why we need calorie information on menus

Let's say you take your family to Claim Jumper for a delicious dinner. You're trying to eat a bit better lately, so you'd like to make a relatively low-calorie dining choice. Should you order the spicy jambalaya, the "widow maker"...

By Ezra Klein  | April 21, 2010; 10:06 AM ET  |  Permalink  |  Comments (25)
Categories:  Food  
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Congress's bipartisan regard for Wall Street money

John Paulson, the hedge-fund manager at the center of the Goldman fraud case, is a model of bipartisanship. Not too long ago, he organized a fundraiser for the Republican National Committee. Then he organized one for Sen. Chuck Schumer,...

By Ezra Klein  | April 21, 2010; 9:00 AM ET  |  Permalink  |  Comments (19)
Categories:  Congress, Financial Regulation, Government  
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Are we actually doing immigration reform?

Or is Barack Obama playing a peculiarly wonkish practical joke on Scott Brown? President Barack Obama called Massachusetts’ new Republican senator, Scott Brown, from Air Force One today to deliver some news: Democrats are moving forward with an immigration overhaul...

By Ezra Klein  | April 21, 2010; 8:00 AM ET  |  Permalink  |  Comments (22)
 
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Vague deal nearing on FinReg bill?

My first thought on this Wall Street Journal article suggesting that Sens. Richard Shelby and Chris Dodd are nearing a bipartisan bill was that it was very, very vague. In fact, the only specific policy it mentions is "the provision...

By Ezra Klein  | April 21, 2010; 7:16 AM ET  |  Permalink  |  Comments (2)
Categories:  Financial Regulation  
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Reconciliation

Today I tried to explain -- and rename -- resolution authority, looked at how the $50 billion liquidation fund actually works, and wondered what exactly Wall Street does to deserve those fantastic profits. Here's what I didn't get to: 1)...

By Ezra Klein  | April 20, 2010; 6:38 PM ET  |  Permalink  |  Comments (4)
 
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Elmo vs. obesity

Can Sesame Street get your kids to eat more broccoli? A new study says yes: Findings from Sesame Workshop’s initial “Elmo/ Broccoli” study indicated that intake of a particular food increased if it carried a sticker of a Sesame...

By Ezra Klein  | April 20, 2010; 6:03 PM ET  |  Permalink  |  Comments (17)
Categories:  Food  
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Explaining FinReg: Resolution authority

There are plenty of bad terms in the financial regulation debate. My friend Matt Yglesias says that "FinReg" is the worst of them. Not me. I like "FinReg"! But I hate "resolution authority," which manages to take an easy...

By Ezra Klein  | April 20, 2010; 5:34 PM ET  |  Permalink  |  Comments (11)
Categories:  Explaining financial regulation, Financial Regulation  
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Re: Wall Street profits

A reader thinks I'm selling the banks a bit short: In your post about Wall Street profits you make the mistake of treating professional services as if they were a commodity. Some of them are close to this -- competent...

By Ezra Klein  | April 20, 2010; 5:12 PM ET  |  Permalink  |  Comments (18)
Categories:  Financial Regulation  
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In defense of ramp-lovers

Things are getting a bit FinReg heavy around here, so let me take a moment to say that there's nothing wrong with people getting excited over ramps (a garlicky, green-onion like vegetable), and saying that arugula's "cultural life cycle...

By Ezra Klein  | April 20, 2010; 3:46 PM ET  |  Permalink  |  Comments (11)
Categories:  Food  
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Wall Street Journal calls out Wall Street

Because it's a serious newspaper committed to objective news gathering, the Wall Street Journal can't come right out and say that the arguments derivatives-dealers are using to fight transparency are total bunk. But they can come pretty close: Proponents say...

By Ezra Klein  | April 20, 2010; 2:30 PM ET  |  Permalink  |  Comments (9)
Categories:  Financial Regulation  
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What accounts for Wall Street's profits?

Earlier today, I speculated on why Wall Street is able to post such remarkable profits. In a competitive market, there's really no place to make 27 cents on the dollar. Some other firm will come in and offer the same...

By Ezra Klein  | April 20, 2010; 2:20 PM ET  |  Permalink  |  Comments (10)
Categories:  Financial Regulation  
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The recession will increase inequality

I'd been hoping that the recession would do a little bit to lower inequality in the country. But Brookings Institution inequality and mobility expert Isabel Sawhill says that the opposite is going to happen. In a forthcoming paper for...

By Ezra Klein  | April 20, 2010; 1:50 PM ET  |  Permalink  |  Comments (12)
Categories:  Inequality  
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Lunch break

You know what are complicated? Derivatives. You know who can explain them to you? Michael Greenberger, who tried to regulate the market in the late 1990s only to be rebuffed by Larry Summers, Robert Rubin and Alan Greenspan. Michael Greenberger...

By Ezra Klein  | April 20, 2010; 12:54 PM ET  |  Permalink  |  Comments (0)
 
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Wall Street's amazing, hard-to-defend, profits

The important thing to remember about Wall Street's profits isn't how big they are. It's how big they are in in comparison to revenues. Annie Lowrey runs through the numbers: Last week, J.P. Morgan announced that it made a...

By Ezra Klein  | April 20, 2010; 11:06 AM ET  |  Permalink  |  Comments (16)
Categories:  Financial Regulation  
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Does Wall Street control the government?

Tyler Cowen offers some interesting thoughts on whether the financial sector dominates the U.S. government: Perhaps the strongest piece of evidence for the financial sector dominance of U.S. political economy is the recent bailouts. Yet it's instructive to ask which...

By Ezra Klein  | April 20, 2010; 10:33 AM ET  |  Permalink  |  Comments (7)
Categories:  Financial Regulation  
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Sarah won't cool the earth

I'd been wondering lately whether the Eyjafjallajokull volcano (which I pronounce, "Sarah") would have a cooling effect on the planet. There's precedent for this: Previous volcanoes have emitted so much ash that Earth's temperature actually dropped. In the early...

By Ezra Klein  | April 20, 2010; 10:00 AM ET  |  Permalink  |  Comments (10)
Categories:  Climate Change  
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Tom Toles is worth a thousand words

By Ezra Klein  | April 20, 2010; 9:00 AM ET  |  Permalink  |  Comments (1)
 
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There is no 'bailout fund'

Section 210 of Chris Dodd's financial regulation bill (pdf) isn't what you'd call a gripping read. In fact, there's really no part of Dodd's bill that you'd call a gripping read. But Section 210, subsection (n), matters because it...

By Ezra Klein  | April 20, 2010; 8:30 AM ET  |  Permalink  |  Comments (46)
Categories:  Financial Regulation  
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Absentee blogger

I'm running around to some meetings this afternoon, so blogging might be a little slow. But the Internets are big. You'll find things to do. For instance: Buzzfeed....

By Ezra Klein  | April 19, 2010; 2:09 PM ET  |  Permalink  |  Comments (2)
 
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The taxman should cometh

Every year the IRS collects data on "the tax gap." The tax gap is the difference between the taxes the agency knows it's owed and the taxes the agency has actually been paid. In fiscal 2008, the tax gap was...

By Ezra Klein  | April 19, 2010; 2:05 PM ET  |  Permalink  |  Comments (13)
Categories:  Taxes  
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Lunch Break

Ever wanted to live in a Lego house?...

By Ezra Klein  | April 19, 2010; 12:35 PM ET  |  Permalink  |  Comments (2)
 
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Explaining financial regulation: Leverage and capital requirements

If you watched the Sunday shows this weekend, they were thick with politicians and administration officials arguing over financial regulation. But the gladiators were getting ahead of the audience, and they knew it. On Meet the Press, Treasury Secretary...

By Ezra Klein  | April 19, 2010; 11:33 AM ET  |  Permalink  |  Comments (24)
Categories:  Explaining financial regulation, Financial Regulation  
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Names you should know: Neil Wolin, Michael Barr, Diana Farrell

The FinReg process has been centered in the Treasury Department rather than the White House, and Congress's lack of preexisting expertise has led it to rely much more heavily on the administration than was true during health-care reform. Which is...

By Ezra Klein  | April 19, 2010; 11:08 AM ET  |  Permalink  |  Comments (0)
 
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Wall Street groveling

The New York Times has a nice round-up of the apologies proffered by various titans of Wall Street, which range from not much of an apology at all ("The issue is not so much the products, but the housing market”)...

By Ezra Klein  | April 19, 2010; 10:34 AM ET  |  Permalink  |  Comments (7)
Categories:  Financial Crisis  
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It's the demand, stupid

Christina Romer remembers the first time she really had to walk Barack Obama through the scope of the mounting recession. "As I was briefing the President-Elect by phone, I found myself saying, 'I am so sorry, the numbers are...

By Ezra Klein  | April 19, 2010; 10:09 AM ET  |  Permalink  |  Comments (28)
Categories:  Economy  
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Wall Street says Washington doesn't understand finance. Well, neither does Wall Street.

"What do you get when you cross a Godfather with an investment banker? Someone who makes you an offer you can’t understand." That's from a talk Paul Krugman gave at the Levy Institute's 19th annual Hyman Minsky conference. The...

By Ezra Klein  | April 19, 2010; 9:01 AM ET  |  Permalink  |  Comments (10)
 
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Tom Toles is worth a thousand words

By Ezra Klein  | April 19, 2010; 8:08 AM ET  |  Permalink  |  Comments (2)
 
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The future is here, and it's nuts

Here's an idea I had for a dystopic novel about capitalist excesses: In the future, companies that discover the functions of human genes can patent the genes they decode. Crazy, right? They then get to control all research over those...

By Ezra Klein  | April 19, 2010; 7:08 AM ET  |  Permalink  |  Comments (15)
 
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