Does bank reform really have a shot?
TEXT OF INTERVIEW
Steve Chiotakis: The White House, fresh off a sprint toward health care reform, is prepping for another marathon: financial regulations. A couple of Democrats — Senate Banking Committee Chair Christopher Dodd, and House Financial Services Committee Chair Barney Frank — met with President Obama yesterday. They’re leading the effort to pass the bank reforms in Congress. But is there enough momentum, or even any will? Matthew Bishop is U.S. business editor for The Economist, and co-author of “the Road from Ruin.” Welcome to the program.
Matthew Bishop: Great to be with you.
Chiotakis: Are we able to recover from this financial crisis, do you think, or is this sort of a new normal?
Bishop: We’re not going to recover from this crisis unless we get real leadership and real policy change. And my worry is, at the moment, that there isn’t that leadership, there isn’t that vision, and there’s not the willingness to take the tough decisions into it. So there’s a real danger that we’re going to just drift when we could be getting ourselves back on track.
Chiotakis: If you look at the stock market right now in this country, it’s looking a lot better than it was, say, a year, year and a half ago. What’s the reality there?
Bishop: So one of the things we say in the book is that there has been some learning from history that our policymakers did look back at the Great Depression and they realized they had to intervene and stop the banking system collapsing. The trouble is that that’s an emergency response, that works — that’s like sort of giving someone life support in the hospital. And to be sustainable, you have to actually get people out of the emergency ward and into rehab. And the economy is still stuck I think in the emergency ward, and there’s no real policies out there to get it back on its feet again. And so my worry is the government policy of pumping up the economy can only last so long.
Chiotakis: What can the United States learn from other economies around the world that are doing a lot better?
Bishop: Well I think America can learn a lot from looking at Japan in the 1990s, where policymakers and business leaders together refused to acknowledge that they had to change. I think America is different in some ways, but I think there’s a real chance that we just don’t get back on the path to growth, because the politicians and the business leaders don’t take the hard decisions necessary. I mean I think the world actually wants America to get back to the things it does best, which is to be innovative and productive. Because actually the rest of the world, for 25 years, has been looking to America for leadership, and the sooner it does get back on its feet, the better.
Chiotakis: Matthew Bishop is U.S. business editor and New York bureau chief for The Economist magazine, he co-authored the book, “The Road From Ruin.” Mr. Bishop, thank you.
Bishop: Thank you.
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