Robert Reich
Robert Reich - 
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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.