Will It Work and How Will We Know? The Future of Financial Reform Conference.

Next Monday, October 4th, I’ll be holding a conference for the Roosevelt Institute titled “Will It Work and How Will We Know? The Future of Financial Reform Conference.”

Here at the Roosevelt Institute we’ve fought for financial reform over the past year with events including our Make Markets Be Markets project. We’ve worked to increase the sophistication of the discussion surrounding specific issues. We’ve also pushed for the role of regulation in creating rules of the road necessary for a healthy financial system that works to build the real economy. The first round of that battle is over with the passage of the Dodd–Frank Wall Street Reform and Consumer Protection Act. It’s time for phase two.

Most other policy initiatives have some sort of conceptual metrics associated with them – “bending the cost curve” for health care, “jobs saved/created” for the stimulus and test scores for No Child Left Behind. Bundled with the goalposts of a metric is an idea of how the policy should work, as the metrics can’t really be separated from creating what it is that is going to be measured. So we need to figure out what bending the cost curve of financial reform is: what are ways to know if the policy implementation is going well or poorly? How can we tell if we are closer or further away from a functioning financial market?

We are gathering some of the best minds of financial reform to discuss this. Here is the current schedule, with a panel focus on Too Big To Fail, as well as a focus on the financial markets broadly construed from derivatives to consumer lending.

It’s a small venue at capacity, but it will all be online shortly after the conference. We’ll be putting out a booklet of white papers by the authors outlining their ideas about what went wrong and all that will be available online.  (Getting this in order is why I’m pulling out what remains of my hair, and why I’ve been silent here lately.)   The conference and materials will feature some people you’ve seen here before, including Michael Greenberger, Wallace Turbeville, Jerome Fons, Rick Carnell and many others.  I’m honored to have opening remarks by Senator Jeff Merkley (D-OR) and Congressman Brad Miller (D-NC), two people who fought tooth and nail to get the best financial reform bill they could.   I hope you check it out online, and we’ll be building off it at this blog in the future.

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2 Responses to Will It Work and How Will We Know? The Future of Financial Reform Conference.

  1. Landru says:

    I have a simple suggestion for you.

    As many of us see it, the “problem” that new financial regulations/system is supposed to cure is that “they”, the class of financiers/bankers/whatever, were getting paid — capturing? — too much money without really doing any useful work. So a quantitative measure for the success of financial regulation/reform would be, are these people actually earning their pay? Financiers are supposed to be moving capital around to where it does the “most good”, which we can define as something like the growth of the GNP or the growth of productivity. The obvious metric, then, is the ratio between (i) some kind of useful growth measure, and (ii) the total compensation going to people in the financial sector, with some time-averaging and possibly with a time-lag if you want to be sophisticated.

    By this measure, I would guess that 1950-1980 looks good in the US, while 1980-2010 looks increasingly worse; let’s see what happens after any next round of changes. What do you think?

  2. Philo says:

    You ask: ” How can we tell if we are closer or further away from a functioning financial market?” Well, *inter alia*, we want a system that won’t readily collapse, plunging us into depression. But knowing (in advance) to what extent we are achieving that requires a grasp of macroeconomic theory that, apparently, no one has, or has ever had, or is ever likely to have. It’s comparatively easy to make up a test that we want children to be able to pass (No Child Left Behind); but no one knows how to test for fragility in the financial system, and so your conference will prove futile.

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