Discussing Financial Reform at the New America Foundation

Two recent New America Foundation conferences considered the origins of the ongoing financial crisis and proposals for reforming the system.

On October 15, Senator Byron Dorgan of North Dakota discussed the requirements for financial sector reform at a conference co-hosted with the Washington Monthly. In a 1994 Washington Monthly cover story, “Very Risky Business”, Senator Dorgan predicted with uncanny precision what actually happened in September 2008. Then, in 1999, Dorgan was one of eight senators to vote against the Gramm-Leach-Bliley Act, which repealed Depression-era banking regulation, cautioning at the time that deregulation “would raise the likelihood of future massive taxpayer bailouts.” Now, as Chairman of the Democratic Policy Committee, Senator Dorgan supports sweeping reform of the financial sector.

Watch video of Senator Dorgan’s remarks here.

And on October 13, Adrian Blundell-Wignall spoke at the New America Foundation as part of the OECD Breakfast Series. Blundell-Wignall, Deputy Director for Financial and Enterprise Affairs at the OECD and author of a recent paper in the Journal of Asian Economics, linked the explosion of complex derivatives to lax regulation, international tax arbitrage, and the persistent “equity culture” on Wall Street. Blundell-Wignall contended that some of the emergency measures undertaken last fall, including bank bailouts and unconventional monetary policy, were painful yet necessary responses to an unprecedented crisis. Yet policymakers have failed to address the fundamental problems of industry competition and corporate governance that enabled the financial calamity, most notably the “equity culture” and the “too big to fail” problem: “We’ve allowed some monsters to emerge in the world of banking,” he concluded, “and I just don’t know what to do about it.”

Watch video of Blundell-Wignall’s remarks, view his PowerPoint presentation, and read his recent journal article here.