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Economist: Kanjorski's shovel to bury 'grave risk'
July 11, 2010 - Mike Maneval
Economics professor Simon Johnson of the Massachusetts Institute of Technology, writing for Huffington Post, notes some of the ways the financial reform package was watered down - particularly Sen. Blanche Lincoln's provisions regarding derivatives and the "Volcker rule" to restrict speculative investments by banks - before savoring provisions inserted by our neighboring congressman, Democrat Paul Kanjorski of Nanticoke.
The provisions, Johnson says, grant "regulators the power and the responsibility to limit the activities or even break up big banks if they pose a 'grave risk' to the financial system." And while the ball on assessing what poses a "grave risk" is in the court of the new systemic risk council and Federal Reserve, Congress, through committee hearings, will be able to press the council for transparency and standards in how it assesses grave risks. Johnson also believes the committee process could provide external critics of bank practices a platform to make their respective cases.
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