Simon Johnson Coming to Madison!

On Monday, August 9th, MIT Professor Simon Johnson will be coming to Madison, Wisconsin to discuss "The Financial Crisis: Where We've Been and Where We Need to Go." Johnson is the editor of Baseline Scenario, the most respected blog on the financial crisis.

Early in the crisis, when consumer advocates, labor leaders and others were caught flat-footed and had a hard time responding to the complicated proposals being rapidly advanced by Bush and then the Obama administration, Johnson was a clear and invaluable critic of the emerging policies. Because of his experience dealing with financial meltdowns as the former chief economist for the IMF, Johnson was well equipped to analyze the government's moves in real time. Baseline Scenario became a life line for many groups and organizations struggling to understand the crisis and the risks and promises of the policy solutions being put forward.

This year Johnson wrote, with co-author James Kwak, one of the best books on the financial crisis 13 Bankers. The title refers to a critical meeting in the history of the financial crisis -- the day in 1998 that then Deputy Treasury Secretary Larry Summers called Commodities Futures Trading Commission chairwoman Brooksley Born and told her to put the kibosh her plans to rein in the shadow derivatives market. Born was worried that this growing black book market presented a threat to the stability of the financial system. Her proposal was simply to subject this market to the common regulatory tools of transparency and margin. But the big banks, Alan Greenspan and the Clinton administration were adamantly opposed to stifling financial "innovation."

Johnson reveals in his book that when Summers called Born on the carpet he told her: "I have thirteen bankers in my office and they say if you go forward with this you will cause the worst financial crisis since World War II."

Born's efforts to regulate the market were preempted by the Commodities Futures Modernization Act of 2000 which prevented any regulation of the derivatives market. Over the next decade the shadow derivatives market grew into to a $600 trillion dollar casino that in fact caused the worst financial crisis since World War II. Larry Summers of course remains President Obama's chief economic adviser and a key architect of the financial reform bill that just passed Congress. Read our profile of Larry Summers and his role in the crisis in the our Sourcewatch wikipedia.

Johnson will be speaking at the Capitol Theater at the Madison Overture Center, 201 State Street, August 9 from 7-8:30 p.m. You need to register for this free event by calling 608-265-0575.

If you can't make it, pick up a copy of 13 Bankers at your local independent bookstore. It makes for excellent summer reading for those of us concerned about the Banksters. Elizabeth Warren has called it "the best exploration yet for how the smart guys on Wall Street led us to the brink of collapse. In the process Johnson and Kwak demystify our financial system, stripping it down to expose the ruthless power grab that lies at its center."