Finance

The New York City Department of Consumer Affairs is housed on some rented floors near Wall Street, amid great banks that profited as millions of American consumers bought toxic loans and catalyzed a recession that drove further millions out of work. While the department doesn't have jurisdiction over the big banks, it is often charged with cleaning up the messes they create.

The Great Recession of 2008-09 has put enormous strain on the social contracts of Western economies. This paper provides an American perspective on how well the social welfare systems of the United States and the European Union countries have performed in cushioning their populations against the economic dislocations associated with the Great Recession and how effective U.S. and European policy has been in softening the severity of the recession and in creating the conditions for future socio-economic progress.

Inspiration can come from the most surprising places.

Take Portugal, for instance. (Granted, there are major differences between the U.S. and Portuguese economic and fiscal situations.)

To read working papers from the Bernard Schwartz Center for Economic Policy Analysis, please click here.

What a difference a global economic collapse makes. Only a decade ago in the 1990s, many opinion leaders proclaimed the triumph of the American model of capitalism. The end of the Cold War replaced the battle of capitalism and communism with a battle of capitalism against capitalism.

Until last week, I'd never heard of "IBGYBG." But during the Senate Permanent Subcommittee on Investigations' eye-opening hearings into ratings agency malfeasance, former Moody's senior credit officer Richard Michalek introduced me to it while testifying about the perverse incentives that dominated the industry. On the investment bank side, he said, bankers were looking to score the one-time fee from whatever securitization deal they were asking the agency to rate, and move on to the next deal.

As this issue goes to press, congressional deliberations on the mammoth financial reform bill have entered the trench-warfare stage, over a seemingly obscure question: where to put the new Consumer Financial Protection Agency (CFPA), which will centralize the writing and (to some degree) enforcement of federal financial regulations on such things as mortgages, savings accounts, and consumer debt. Should it be an independent agency, like the Securities and Exchange Commission, or a subunit of the Treasury Department or the Federal Reserve?