Remember, Maestro Means ‘Master’
Wednesday, May 27, 2009 at 6:06 pm
There are plenty of noteworthy quotes in the Peter Baker piece on former President Bill Clinton in The New York Times Magazine, and the published interview transcript that accompanies it. So far, this strikes me as the noteworthiest; while addressing criticisms of his administration in light of recent financial failures, Clinton said:
Then there’s the argument from the left that I shouldn’t have signed the bill that got rid of the Glass-Steagall law because that enabled banks and investment banks in effect to merge their functions.
And then there’s the argument that I make, which is that I should have raised more hell about derivatives being unregulated. I believe the last one is by far the most valid, although I don’t think that the Congress would have permitted anything to be done because Alan Greenspan was against it.
Let us hope that the powers that be reflect on this as they consider what new authorities to grant the Federal Reserve as part of a new regulatory reform bill. For a very good reason — to protect the credibility of the central bank as an inflation fighter — the Fed has a great deal of statutory autonomy. That this authority should extend to virtual veto power over regulatory reform based merely on expressed preference is an unpleasant thought.
Obviously, Clinton had a different Congress with which to work. On the other hand, the previous and current Congresses’ reluctance to act on potentially divisive issues had led to an enormous expansion of activity at the Fed. Things needed to be done, and so the Fed, with the blessing of the executive branch, did them. A license to protect the value of the currency is not a license to take the lead in all things economic. Time for Congress to begin shaping up and doing its job.
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