Transparency's a must to gain our trust
For years many people were in the dark about what was hiding behind the "wall" in Wall Street. Commentator Robert Reich says for Wall Street to earn the public's trust, it's got to become a lot more transparent.
Robert Reich (Robert Reich)
TEXT OF STORY
Kai Ryssdal: The president said it last night. The Treasury secretary said it today. And he's going to say it again tomorrow in yet more congressional testimony -- that the Obama Administration wants new ways to protect against systemic risk in the financial industry. New regulations and government powers. Commentator Robert Reich thinks that's a great idea. He's just worried about execution.
ROBERT REICH: The only real way to restore trust in Wall Street is to make the Street more transparent.
So much was done off the balance sheets, buried in incomprehensibly complex derivatives, swaps. Debt instruments that were collateralized, securitized, guaranteed, insured, co-partied. Triple-A-rated nothings, sliced and diced until no one could possibly know.
Regulators didn't have a clue. Big institutional investors, no idea. Even the top brass at the big banks and AIG didn't know. But what did they care when the money was rolling in?
Transparency is about accountability to investors and to the public. And the problem right now is so much of the financial sector appears to be accountable to neither.
The Treasury has thrown a TARP over much of the Wall Street bailout. Even worse, the Federal Reserve Board has so far swapped over a trillion dollars of T-bills for dubious collateral and murky debt instruments. Forget transparency. Several members of the House and Senate banking committees tell me they don't know what the Fed is doing.
The Fed is launching an additional trillion-dollar, off-the-federal-budget program to lure investors into making consumer loans. Maybe this is a good idea. But who knows? There's no appropriation, no congressional oversight. And get this: among the investors to be lured into this program are hedge funds. You can't get less transparent than a hedge fund. They could collapse tomorrow.
The Treasury and Fed are trying to do their jobs under the most difficult circumstances in over a half century. But they're losing sight of a very basic principle: You can only make a financial system more transparent and accountable by using techniques that are themselves transparent and accountable.
Ryssdal: Robert Reich is a professor of public policy at the University of California, Berkeley.
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Robert Reich is awesome. thanks for carrying his stories.
Lack of transparancy, leads to high information costs. The Free Market only works, if information costs are low to non-existant.
there's a reason all this was hidden. as those who looked closer at Madoff's numbers can tell you, if you can't figure out how it works--its probably because it doesn't work.
It's not being "negatory". It's being honest.
Is it so much to ask? Honesty from institutions keeping society safe and whole? That is the point here. We are being dismantled, correct?
I agree wholeheartedly with Prof Reich.
I understand what Mr. Reich is saying, but what is the point in getting debative with the Obama administration when it seems that no one gave the Bush administration a run for their money when they were spending money recklessly?
I simply do not understand where all of the criticism comes from. I know that President Obama has a stimulus that is incredible, but it seems that his stimulus has a good chance of working for the greater good of the US society. Why is it that so many economic analysts are dreading the Obama stimulast plan when there has been eight years of non-accountability? I am very confused where all of this bad sentiment comes from. It just seems that everyone is hanging on the doom and gloom in stead of trying to find a way to make the economy work. Aren't they the individuals who have the Phd's in Economics? I am simply an individual who received a bachelors in Philosophy and play music for a living but i know the difference between finding the right path and simply harping on the easy tarket. I hope the intelligent people of our society can find a positive way to help our president, and his administration, instead of being negatory individuals.
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