NYT: Johnson discusses Kaufman

Photograher: Bendan Smialowski/Bloomberg

Simon Johnson is the Ronald A. Kurtz Professor of Entrepreneurship at the M.I.T. Sloan School of Management, senior fellow at The Peterson Institute for International Economics, and co-author of ‘White House Burning: The Founding Fathers, Our National Debt, and Why It Matters to You.’”

“After a long summer of high-profile scandals — JPMorgan Chase trading, Barclays rate-fixing, HSBC money laundering and more — the debate about the financial sector is becoming livelier.  Why has it become so excessively dominated by relatively few very large companies? What damage can it do to the rest of us? What reasonable policy changes could bring global megabanks more nearly under control? And why is this unlikely to happen?  If any of these questions interest you — or keep you awake at night — you should take another look at the last time we had this debate at the national level, and reflect on the work of Ted Kaufman, the former Democratic senator from Delaware, who was far ahead of almost everyone in recognizing the problem and thinking about what to do…”

“The book is also about the details — the legislative and bureaucratic regulatory process through which your future prosperity is sold down the river. If you don’t follow the details, you’ll never really understand what happened to this country. Mr. Connaughton has done us a great service in laying all bare.  But be warned: while fascinating, much of what is in this book will turn your stomach. Mr. Connaughton is now out of politics, and I very much doubt that he will ever return. Hence the complete honesty missing in most political memoirs; no bridge is left unburned.”

“Could we change all of this in the world’s greatest democracy? Mr. Connaughton exhorts us: “Every voter who wants to break Wall Street’s hold on Washington should put Congressional and presidential candidates to the test,” demanding that they shun lobbyists’ contributions and asking, “Will you agree not to take campaign contributions from too-big-to-fail banks and nonbanks?”

Will it happen? This seems unlikely within our existing party system. It would take a broader citizens’ movement, a groundswell of educated opinion focused on breaking the political power of Wall Street and ending the enormous, nontransparent and dangerous subsidies currently received by very large financial institutions.  Intellectually, the right and the left can unite on this issue. But where are the political leadership and organization needed? We had a huge crisis and elected a president who promised change — and that didn’t make much difference. The biggest Wall Street firms are larger and probably now more powerful than they were in the run-up to 2008.”

See, Simon Johnson, Why Does Wall Street Always Win? (New York Times, Aug. 23, 2012), discussing Ted Kauffman’s book, The Payoff: Why Wall Street Always Wins (Prospecta Press, 2012).