Sunday, September 20, 2009

The Recession Is Over. Now what?

Peter Boone and Simon Johnson (right) have a column in which they make these two simple recommendations.
We should prohibit companies and senior managers in regulated financial industries from making donations to political campaigns. …

We should significantly raise capital requirements for the financial sector—and the bigger the bank, the more capital you should need. (Of course, this would discourage banks from growing too large.)
These would do a great deal to reduce the systemic risk big-finance poses for the rest of the economy. It certainly makes sense. Since finance is an infrastructure function, but since we run it as a for-profit operation, it should not be influencing the politics of how it is regulated. Similarly, because it is an infrastructure function, society depends on it. The larger it is, the safer we must ensure that it be.

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