“It is becoming clearer that banks are not as willing to lend,” he said in an e-mailed message. “With their risk rising once again, risk premiums on non-financials must rise commensurately.”
They don’t see a recovery around the corner either, “The broad sense is we have not seen the bottom there yet,” said Bert Ely, a banking consultant in Alexandria, Virginia. “For later this year, and into next year, there are just big question marks out there.”
Question marks indeed.
What are the questions we should be asking? What happened to changes for ratings agencies that gave high marks for bogus mortgage securities? Why trust the Fed which, in the words of one critic “started the fire” through low interest rates to extinguish it
Simon Johnson, the ex-IMF Chief now at MIT asks some others
•Has the President really been briefed on the supposed benefits of having large financial institutions with great economic power and pervasive political influence? Don’t just claim that these are a good thing – tell us, in detail and preferably with numbers, what we the public gain from the presence of these behemoths among us. Keep in mind that “everyone has them” is no kind of argument – something so manifestly dangerous is not to be blindly copied.
•Why was executive and other compensation so notably absent from the latest Geithner-Summers joint statement of our problems and likely solutions? Does the President really expect us to believe that any set of reforms will work if they do not directly constrain the amounts that can be earned from misunderstanding risk today and hoping that the consequences do not appear on your watch? Does he have any idea of how the people who run big financial firms will game whatever controls try to limit their risk-taking?
•. Can President Obama finally talk about the much broader break down of corporate governance in this country, with boards of directors serving no discernible purpose in terms of limiting the excesses of corporate executives in the financial sector but also more broadly? Surely, without a reform package that includes measures to address this core issue, we will get exactly nowhere.”
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