Is it time for Washington to break up or shrink America’s largest banks? On this week’s Money & Politics Podcast, Jim’s guest is economist Simon Johnson who advocates doing just that. Johnson, currently an MIT business professor, used to be the chief economist of the International Monetary Fund. He’s also a senior fellow at the Peterson Institute for International Economics in Washington and a co-founder of the financial blog BaselineScenario

In addition, Johnson is a weekly contributor to The New York Times’ Economix blog and a regular Bloomberg columnist. Along with James Kwak, Johnson is author of 13 Bankers: The Wall Street Takeover and The Next Financial Meltdown and White House Burning: The Founding Fathers, Our National Debt and Why it Matters to You.

Members have made 3 comments.

  1. Profile photo of Indaba Inactive

    Great discussion.

    • #1
    • January 23, 2013 at 5:04 am
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  2. Profile photo of Duane Oyen Member

    He is 100% right, and Simon Johnson is the Best Democrat Available on this subject- go get his longer talk with Russ Roberts – check what he says about Timothy Geithner and his crowd.

    Bank size no more than $100 to 250 billion assets (they can get there any way they choose), 25% equity capital, and statutory firing of any management type whose bank gets any bailout- including secondary, as lender to a failing bank. Plus 5 year clawbacks on incentive compensation.

    Most people forget that the biggest beneficiaries of TARP were not the banks in trouble, but those who had lent them money- and they got 100 cents on the dollar. Plus, and therefore, their management bonuses, of course. 

    Paid for by us.

    • #2
    • January 24, 2013 at 1:55 am
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  3. Profile photo of Sal Member
    Sal

    Personal liability by directors and senior management is a must in the event of an institution being rescued by the federal or state government. Irresponsible bank directors and managers should be impoverished by their poor stewardship of federally insured institutions. Clawbacks are not nearly tough enough.There should also be lightly regulated non-federally insured institutions that are limited in size but otherwise free to take deposits and make loans as they see fit. This will be needed because federally insured banks would become extremely averse to risk once personal liability is imposed.The result would be large but very cautious legacy banks and small, new and highly entrepreneurial banks . The latter would finally allow us to escape our economic doldrums.

    • #3
    • January 26, 2013 at 6:02 am
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