The growth of the U.S.'s bigger and broader productive economy has been stunted by bad policies and bank bailouts benefiting rent-seeking financiers siphoning off an outsized percentage of the nation's gross domestic product (GDP).
Neel Kashkari is a former Goldman Sachs Golden Boy who left that infamous organization to join the Treasury Department, where he was responsible for overseeing $700 billion in bailouts to his former employer and other Wall Street firms. Now he wants to run for governor of California on that record.
I didn't hear Treasury Secretary Jack Lew on TV yesterday, but I read this morning that he was asked "how come the Obama administration bailed out the banks but isn't talking about doing so for Detroit?"
To persuade us today that a future Treasury Secretary really will pull the plug on an insolvent US G-SIFI, the resolution scheme will have to be widely viewed as nearly foolproof -- that is, virtually free of "Lehman risk."
Given the massive bailouts the industry scored in 2008-9, and how easy policy-makers have been on them, the arrogance and hubris of talking about Soviet style government is pretty amazing. But then that fits quite well with Romney and Ryan, too.
If safeguards like Dodd-Frank fail to prevent another crisis, there will have to be a serious reexamination of the system. Yet people in the future will be able to point to our regulatory structure as either preventing or permitting another collapse.