Arnold Kling  

Obama Doesn't Heart Glass-Steagall

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In this interview, he says,


But when it comes to something like investment banking versus commercial banking, the experience in a country like Canada would indicate that good, strong regulation that focuses less on the legal form of the institution and more on the functions that they're carrying out is probably the right approach to take.

Canada does not separate investment banking from commercial banking. Concerning this interview, Tyler Cowen writes,

I do not agree with Obama on all points but he understands economic policy better than do most professional economists


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COMMENTS (7 to date)
Greg Ransom writes:

What the hell is Obama saying?

I think both Obama and Cowen are doing what philosopher Harry Frankfurt describes in this essay:

http://www.gwinnettdailyonline.com/articleB5BD6D4417AF444DBD8F9770AA729B26.asp

Jacob Oost writes:

Cowen, put down the Kool Aid! Obama does a great job of parroting what his economic advisers have to say when he wants to sound knowledgeable about the economy. If he's not in "sound knowledgeable about the economy mode," he spouts pseudo-populist protectionist left-wing nonsense that belies his ignorance of economics. I honestly don't think he knew much, if anything, about economic theory before he started running for President.

Bill Woolsey writes:

I appreciated that he was straightforward about providing finance for the U.S. economy vs. Wall Street securitization as a U.S. comparative advantage. How much economic policy is aimed at making sure that we have finance for the American people and how much of it about having Wall Street
export financial services to the rest of the world?

Snark writes:

Tyler’s comment, whether he realizes it or not, is more of an indictment of economics than praise for Obama. It reminds me of the exchange that took place between Chris MacNeil and Father Damien Karras in the movie, The Exorcist:

MacNeil: I thought you were supposed to be an expert on this.

Karras: There are no experts. You probably know as much about possession as most priests.

Mr. Econotarian writes:

Canada requires insurance to be purchased on high-loan-to-value mortgages, so subprime mortgages account for less than 5 per cent of Canadian mortgage lending.

http://www.bankofcanada.ca/en/speeches/2008/sp08-16.html

If the US had a hard-and-fast regulation against >80% LTV mortgages, I suspect the whole real estate bubble would not have grown to such levels, nor would so much principle have been lost in defaults.

"If the US had a hard-and-fast regulation against >80% LTV mortgages, I suspect the whole real estate bubble would not have grown to such levels, nor would so much principle have been lost in defaults."

Then poor people wouldn't be able to afford housing that they can't afford and then companies like Freddie Mac and Frannie Mae wouldn't have had millions to donate to politicians pockets to get the votes of those that can't afford the houses they now live in...

George writes:

Señor Econotarian wrote:

If the US had a hard-and-fast regulation against >80% LTV mortgages, I suspect the whole real estate bubble would not have grown to such levels, nor would so much principle have been lost in defaults.

Principal was lost in defaults.

Principle was lost in the bailout.

(And why not set the threshold at 90% LTV? That way my initial mortgage would still have been legal. By the time I refinanced, the LTV was more like 60%.)

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