This week, US President Barack Obama is expected to announce the most significant overhaul in financial regulations since the Great Depression. In an op-ed in The Washington Post on Monday, Obama aides Timothy Geithner and Lawrence Summers lay out a detailed plan.
Many of their recommendations may help global finance if implemented, but will they be implemented?
Obama was elected on a mandate of radical change. But till now that has meant, for the most part, continuing George Bush’s counterterrorism policies and approach in Iraq. It’s also meant fairly standard Left-leaning prescriptions for the US economy. If he hasn’t delivered sweeping change here, we’re sceptical how he’ll overhaul the beast called Wall Street.
Former International Monetary Fund chief economist Simon Johnson has noted how much Wall Street has captured the US political establishment. If this beast can get accounting standards rewritten and bad debt guaranteed, and end up with profits amid a slowdown, it may take more than Obama to tame it.