OPINION
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Obama's Bank Plan Punts on Tough Parts
Krugman, Pearlstein agree: It doesn't address key problems
By Kevin Spak
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Posted Jun 19, 09 7:48 AM CDT
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(Newser)
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Barack Obama knows what caused the financial crisis, but his regulatory plan “basically punts on the question of how to keep it from happening all over again,” writes Paul Krugman in the New York Times. Obama’s plan takes the crucial step of regulating the “shadow banking” system, giving the Fed power over any systemically important institution. But it wouldn’t touch executive compensation or the ratings agencies, both of which played major roles in the crisis.
Without more sweeping change, “you can almost guarantee that the inmates will be back in charge of the asylum,” agrees Steven Pearlstein in the Washington Post. Congress might have fought real change, like a consolidation of regulators, or more stringent derivative controls. “But given that we have just gone through the worst financial crisis in 75 years, one would hope that the government’s response would be something more than political triangulation.”