An interesting prediction from Simon Johnson, an economist at the Sloan School of Management at the Massachusetts Institute of Technology:
But Johnson, a former senior researcher at the International Monetary Fund, said further steps might well be needed, with much work remaining for the next administration.
The list, he said, includes overseeing the workings of the rescue plan, helping to guide the contraction and recapitalization of the banking industry, assisting homeowners who face mortgage defaults, and in general shaping policy for a nation that will be less accustomed to easy credit and overspending.
“Managing this issue is going to dominate the agenda of the next president for two years,” Johnson said.
And here we run into a problem no matter who wins in November, as neither one of these men announced their campaigns with the intention to spend the first half of their first term managing the details of a rescue plan and steadily nursing the banking industry back to health.
Few were more critical of McCain’s hokey-pokey on postponing the debate than me, but I would note that McCain’s behavior at least indicated that he felt that the bailout/rescue was a big, big deal. Obama, by continuing his campaign, and refusing to suspend campaigning, seemed strangely disengaged, at least for the first part of last week. “Senator, we’re spending $750 billion you were gonna commit to health care over here. You want in on this, or are you just cool with whatever we work out?”
Once both candidates did get engaged, each one appears to have played a productive role. Obama actually killed a Democratic proposal that would have let bankruptcy judges rewrite mortgage terms. McCain gave the House Republicans leverage to create the new federal insurance program, another way to shore up strugging institutions at greatly reduced cost to taxpayers.
But as noted Friday, Obama aims to take office with a big, expensive, ambitious agenda, and now various limited resources — money, time, the attention of the president — will be occupied by the banking industry.