How to Break Up the Banks …

… and stop massive bonuses, and rein in wall street greed

Published on AlterNet, by Zach Carter interviewing Nouriel Roubini, May 18, 2010.

… AlterNet economics editor Zach Carter recently spoke with Roubini about the financial crisis, the subsequent bailout, the financial reform bill moving through Congress, and the global economic outlook:

Zach Carter: How is the financial reform legislation going

Nouriel Roubini: In my view, the financial reform bill goes in the right direction in terms of what needs to be done, but it doesn’t go far enough in a number of dimensions. My view is that if banks are too big to fail, using higher capital charges and an insolvency regime is not going to work. If they’re too big to fail, they’re just too big, and they should be broken up.

If they’re too big to fail, they’re also becoming too big to be saved, too big to be bailed out, and too big to be managed. No CEO can monitor the activities of thousands of separate profit and loss statements, and the activities of thousands of different bankers and traders. So that’s one dimension. We must be capable of going beyond the Volcker Rule, which is essentially Glass-Steagall-Lite. We need to go all the way and implement the kind of restrictions between commercial banking and investment banking that existed under Glass-Steagall … (full long 5-pages interview text).

Link: Standing in the way of development? A critical survey of the IMF’s crisis response in low income countries, on European Network of Dept and Development, by EURODAD,and Third World Network TWN, 20 April 2010.

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