This is a terrific and very accessible interview with Boston College professor Ed Kane, who is a long-standing critic of the failure to rein in financial firms that feed at the taxpayer trough. At one point in the talk, Kane and his interviewer Marshall Auerback discuss how casinos are well aware of the fact that the house can lose and they monitor gamblers intensively to make sure that no one is engaging is sleight of hand. Thus if we treated our banking system like the financial casino that it has become, we’d be much better off than we are now.
I hope you’ll send this video to people who wonder what if anything happened with financial regulatory reform. They’ll get some answers, even if they are ones they might not have wanted to hear.
Kane describes how little regulation has changed things: banks are still in the business of dumping tail risk on the public, and the changes in some rules and procedures haven’t changed their basic incentives. Provocatively, Kane calls for prosecuting a bank holding company as a way to force a dismemberment/downsizing, as well as pour décourager les autres. He also discusses how regulatory changes will shift activity to London, but the US will still wind up bailing out the messes that result.