The US Treasury Secretary Defends Financial Reform And Attacks Lobbyists And The Media Who Oppose Reform

The US Treasury Secretary, Tim Geithner reminds us about the causes of the financial crisis that led to the Great Depression. He also tells us that government did not have the authority, or the tools to deal with the crisis. He has been compelled to remind us about the causes of the financial crisis because financial system lobbyists, and many in the media, including the WSJ which published this article, are opposing the reforms to the financial system that are contained in the Dodd-Frank bill passed by Congress. Geithner argues that the financial crisis may not have occurred, and that government would have been more able to deal with a financial crisis if Dodd-Frank had been in force prior to the crisis.

I am pleased to see Geithner stepping up to the plate and reminding us that Wall Street, left to its own devices, is designed as a compensation system for management and traders. Their level of compensation is dependent upon the levels of risk and leverage as well as the opaqueness of the derivative market. The intent of Dodd-Frank is to reduce the systemic risks to the financial system, without imposing unnecessary burdens on the operation of a much safer financial system. We should resist the efforts of bankers to return to the good old days that led to the financial crisis. Dodd-Frank is not perfect, but it is a much needed improvement over the under-regulated financial system that bankers prefer.