Your Turn: A Financial Product Safety Commission?
Starting at 10 this morning, the investigations and oversight subcommittee (part of the House Committee on Science and Technology) will hold a hearing on “The Science of Insolvency.”
Chairman Brad Miller (D-N.C.) apparently wants to explore what we know and don’t know about how to measure and enforce the insolvency of big banks – measurement is the science, but presumably enforcement is more of an art. He’s worried, as are many, that creating banks that are Too Big To Fail distorts the financial system and hurts ordinary consumers – for example, by creating the conditions for a financial crash and deep recession.
Miller is also an outspoken advocate of a kind of Consumer Financial Product Safety Commission – the idea is to inform and protect Americans on personal finance they way they are protected (or are supposed to be protected) on things like auto safety and baby cribs. I strongly suspect that this idea will work its way into the discussion.
Jeffrey Sachs may talk about the need for new taxes to pay for the Obama administration’s agenda, as well as for the financial-sector cleanup inherited from previous administrations. Jeff likes to give it to you straight, without any sugarcoating, and is obviously concerned about our government's solvency.
Dean Baker, a prominent blogger, is likely to emphasize what went wrong with housing, a subject on which he is a leading expert. I suspect that he will strongly Miller on a financial safety commission; too many consumers were misled, one way or another.
I’ll talk about the political economy of how our financial system got to where it is, building on the article James Kwak and I published in the May edition of the Atlantic. My main concern is the way certain pro-finance and anti-consumer ideas have become entrenched in Washington (e.g., “We must protect the big banks above all else”) and how to change that.
The fourth witness is David John, best known for his ideas on how to change Social Security. At least in the past, he favored the further deregulation of banking. It will be interesting to see whether and how he has altered his views.
May 19, 2009; 5:57 AM ET
Categories: Banking , The Hearing Poll
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