The Speech For Which We Have Been Waiting

For nearly two years now we have waited for a speech. We need a simple speech and a direct speech – most of all a political speech – about what exactly happened to our financial system, and therefore to our economy, and what we must do to make sure it can never happen again.

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On Thursday, Senator Ted Kaufman (D., DE) is due to deliver a strong blow to the overly powerful and unproductively mighty within our financial sector. He will say, according to what is now on his website,

1. Excessive deregulation allowed big finance to get out of control from the 1980s – but particularly during and after the 1990s. This led directly to the economic catastrophe in 2007-08.
2. We need to modernize and apply the same general principles that were behind the Glass-Steagall, i.e., separating “boring” but essential commercial banking (running payments, offering deposits-with-insurance, etc) from “risky” other forms of financial activity
3. We need size caps on the biggest banks in our financial system, preferably as a percent of GDP.
4. We should tighten capital requirements substantially.
5. And we must regulate derivatives more tightly – on this issue, he likes at least some of the steps being pushed by Gary Gensler at the CFTC.

Full Story: Simon Johnson: The Speech For Which We Have Been Waiting.