Robert Reich
Robert Reich - 
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KAI RYSSDAL: There are a lot of moving parts to the plan Henry Paulson released this morning. There are the economic pieces John and Amy told us about. There's the political piece I talked about with Joe Grundfest, and there's the public relations piece.

Commentator Robert Reich says Secretary Paulson made a good sales pitch, but he's short on substance.

ROBERT REICH: It's being called the broadest overhaul of Wall Street regulation since the Great Depression, but look closely at the proposal announced this morning by Treasury chief Hank Paulson, and you'll find a thin veneer of regulatory filagree designed to appease a public outraged by the mismanagement of its savings and the taxpayer-financed bailout of Wall Street's well-padded executives, but also, sadly, designed to accomplish just about nothing.

Paulson rearranges and consolidates lots of regulations and seems to beef up the oversight responsibilities of the Fed, but the Fed would not routinely examine the books of investment banks and hedge funds the way bank examiners now scrutinize regular banks, and agencies like the SEC would actually lose some of their current authority.

Most significantly, the proposal doesn't call for investment banks, hedge funds and other currently unregulated financial institutions to hold capital assets proportional to the risks they're taking on. That's the case even though the Fed now has subjected taxpayers to the risk of bailing out any large financial institution that gets into trouble because that financial institution doesn't have enough capital to back up its risky bets, even though two-thirds of subprime mortgages issued in the last five years originated with non-banks that have little or no capital requirements, and even though 80 percent of all lending today is from unregulated banks that hold almost no capital assets.

Paulson says he doesn't blame the current regulatory structure for current market turmoil. Well, Hank, if it's not the current Wild-West take-any-risk-with-other-people's-money non-regulatory structure we have now, how do you explain the housing bubble and the credit meltdown and the taxpayer bailout of Wall Street? How exactly are your proposed fixes going to prevent another crisis?

Hank Paulson's discussion paper is not broad; it's not an overhaul and heaven forbid, if we're facing another Great Depression, it will do absolutely zilch to head it off.

RYSSDAL: Robert Reich was secretary of labor for President Clinton. Now he teaches public policy at the University of California, Berkeley. His latest book is called "Supercapitalism."