TEXT OF INTERVIEW
Bill Radke: As we’ve said, President Obama speaks near Wall Street today to urge Congress to tighten up financial regulations. The president has said: “If we don’t change what led to the crisis, we’ll doom ourselves to repeat it.” But how do we know that? I asked Marketplace’s economic editor Chris Farrell to explain it. Hi, Chris.
Chris Farrell: Good morning, Bill.
Radke: Chris, it looks like we are coming out of this recession. It is outrageous that taxpayers had to foot the bill, but couldn’t you say that the system has kind of proven it can take a crisis and bounce back?
Farrell: Well, the system has proved that lots of nights eating pizza and soda, you can come up with some ways to try and save the system. But I gotta tell you, Bill, you know, the next time around we can be hit with the kind of body blow that just knocks the global economy back into a depression.
Radke: Why do you say that? What are you envisioning?
Farrell: First of all, the U.S. acted as lender of last resort to the global economy. But we’ve had a huge increase in our debt, bankers are not popular on Main Street, and I don’t think that our politics would allow for a reprise. But there’s also this very important point, which is that the too big to fail banks, they’re global in scope. So we do need better regulation — absolutely. But if it can’t be done internationally, it can’t be done at all.
Radke: Well then that’s very worrisome, isn’t it? I mean what are the chances of us regulating a global banking system.
Farrell: Well, I am really worried. I mean can you imagine the U.S. and China saying that we’re going to give up our power to a global regulator? Not going to happen. But we do need uniform global rules. And that’s why the action’s going to shift from Washington to Switzerland. That’s where the Basil committee’s meeting: 27 countries trying to come up with uniform guidelines.
Radke: Marketplace’s economics editor, Chris Farrell. Thank you, Chris.
Farrell: Thanks a lot.
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