In Honor of Theodore Roosevelt and Financial Regulation Reform

Ezra Klein of The Washington Post reports that the Financial Reform bill might actually pass today, or at the latest Saturday.

Yesterday, Simon Johnson, the MIT professor and co-author (with James Kwak) of 13 Bankers: The Wall Street Takeover and the Next Financial Meltdown, posted an article at Project Syndicate entitled "A Roosevelt Moment for America's Megabanks?"  He was talking about Theodore, the trustbuster of the early 20th century, who was not afraid to use Sherman Act powers to break up companies that were not necessarily too big to fail, but too big to do good for the economy, i.e. monopolies.

Johnson sounds somewhat encouraged that the new Dodd-Frank bill has embedded in it the Kanjorski Amendment that will give "federal regulators…the right and the responsibility to limit the scope of big banks and, as necessary, break them up when they pose a 'grave risk' to financial stability."

But he cautions:

Regulators can do a great deal, but they need political direction from the highest level in order to make genuine progress. Teddy Roosevelt, of course, preferred to “Speak softly and carry a big stick.”  The Kanjorski Amendment is a very big stick. Who will pick it up?

Notice in the photo above that even when Teddy was relaxing in his cabin with his lap dog and a good book, he has his big stick nearby  — to the right of the door.  I hope our president has the courage not just to pick up the stick (make a speech), but to use it, and then, like Roosevelt, keep it handy.

I highly recommend in this order:

Too Big to Fail
by Andrew Ross Sorkin

The Big Short: Inside the Doomsday Machine
by Michael Lewis

13 Bankers: The Wall Street Takeover and the Next Financial Meltdown
by Simon Johnson and James Kwak

If you want to read just one, pick The
Big Short.  It's the best in terms of context and description of the events and players involved.   Great read.  Also, Ezra Klein's Wonkbook is a good round up different perspectives on the bill's final passage.  Now, I am off to the library for something light.

Photo via DPDaigle.com.  I don't know who took it.