TEXT OF INTERVIEW
Steve Chiotakis: We’ve been getting a bunch of bank earnings the past week or so, and it seems like some financials are right back in the green. Is this reminiscent of days gone by? Fortune Magazine’s Allan Sloan joins us this morning with his take. Good morning Allan.
Allan Sloan: Morning, Steve.
Chiotakis: So let’s take the calendar back and ask: What’s the difference between, say, the year 2007, and today with these bank earnings?
Sloan: In 2007 and today, you have record profits and huge bonuses. But in 2007, almost no one was paying attention, and today everyone’s paying attention.
Chiotakis: Yeah, a lot of people paying attention right now want financial regulatory reforms — from the president, from Congress. You think we’ll see any movement on those?
Sloan: Well again, it sounds great. What impact it would have on actually changing anything . . . but when you come down, nothing really happens.
Chiotakis: Arne’t politicians fearful of those constituents who are saying, we want reform, we can’t be bailing out big banks now?
Sloan: Sure, sure they’re fearful. And they want to be seen to be doing something. And as we know, the politicians are, of course, afraid of losing their jobs. But I think they’re also afraid of the banks.
Chiotakis: And why are they afraid of the banks, Allan?
Sloan: Well, now, as of last week now, the banks can spend endless amounts of money campaigning against them.
Chiotakis: The Supreme Court decision, right.
Sloan: The Supreme Court decision. Second, if you look at the history of Washington, you discover a whole lot of people who leave public life end up connected to Washington with very lucrative jobs. And you generally don’t want to annoy the people you’re looking to finance the next stage of your life.
Chiotakis: So what’s the solution, then? What do we do?
Sloan: You separate investment banking from commercial banking. You make sure that the remaining commercial banks are not too big to fail. And you try to have a competitive system where craziness hurts people’s stock prices. And this time they may be more careful than they were three years ago, because that’s when the seeds of destruction were sewn.
Chiotakis: Fortune Magazine’s Allan Sloan with us this morning. Allan, thank you.
Sloan: You’re welcome, Steve.
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