CCTV-9: Obama’s State of the Union and Proposed Banking Reforms
On Thursday and Friday last week, I appeared on back-to-back episodes of CCTV-9’s “Dialogue” centered on the U.S. political scene.
The first show focused on President Obama’s recently announced proposals to reform the U.S. banking system, in the wake of the global financial crisis. I made some points that I know are out-of-sync with popular feeling these days, but I believe are essential if we’re going to get this right. I’m not opposed to reform — in fact, I believe that reforms that address the real causes of the financial meltdown are essential. But I think that Obama’s Paul Volcker-inspired proposal to revive Glass-Steagall (in spirit if not in every detail) will move us in precisely the wrong direction, and only further concentrate risk and diminish transparency in the system, without doing anything to properly align incentives going forward. (As I mentioned in the show, I found it telling that the Europeans applauded Obama’s announcement but declared they have no intention of pursuing a similar course.) I’ll be elaborating on these criticisms, and on what I think more meaningful banking reform should look like, in future posts.
The second show focused on the President’s broader State of the Union message and its political context. (As many readers already know, I used to work on Capitol Hill. In fact, I was actually sitting in the House chamber during the 1996 State of the Union when President Clinton declared that “the era of Big Government is over.”)