De overheid als keuzearchitect? - Wetenschappelijke Raad voor het ...

de ov er heid a l s k eu z e a rchi t ec t
20
People would use the low interest rates to get out a new mortgage on
the increased value of their home, in order to build a big addition or
put in a big television set. There was a lot with keeping up with the
Joneses. My neighbor put an addition to his house and put in a big tv,
so I need to put an addition on my house and put in a bigger tv. Now
again the same problem occurred with ceo’s. There was earnings
envy. On the golf course you had one ceo bragging about how much
money he was making selling credit default swaps, and others were
saying: you are not doing that? You know I’m making hundreds of
millions, why are you not doing that? So we are keeping up with the
Joneses from the bottom to the top, so what can we do about this? I
don’t think the answer is heavy-handed government regulation. And
the reason is that the regulators would not be capable of regulating.
Bob Ruben, a former treasury secretary who was serving as the vice
chairman of Citigroup has admitted never having heard of the term
liquidity put, until he discovered that Citicorp had lost 50 billion
dollars selling liquidity puts. Now they don’t come any smarter than
Bob Ruben. I gave a talk in Washington last February to the treasury
department and I asked: who here is ready to take over running
Citibank? No one raised their hand. I gave the same talk in London a
couple weeks later and asked the same question about the Royal Bank
of Scotland and got the same answer. So we don’t want bureaucrats
trying to run banks that were too complicated for the ceo’s to run. I
think the answer has to be in better disclosure, again electronic. Here
is the needle we have to try to thread. We need to get the organizations
to disclose enough so that the regulators can monitor what
they are doing and the market can also monitor what they are doing.
If I am an investor in aig, I want to know what their exposure is to
credit default obligations. so that I don’t invest in that company. But
we can’t ask them to disclose so much that they can no longer make
a living. That is the goal. I know the devil is in the detail, as it always
is, but I think that’s the goal we should be shooting for. One principle
I’ve been urging is: too big to fail means too big to hide. So the bigger
you are, the more you have to tell us. With some little bank in some
country town, I don’t care what they are doing. If it is Citibank and we
have to bail them out if they go under, then they have to tell us at least
what their leverage is and what exposure they have to systematic risk.