How to Break Up Goldman Sachs?
Let Them Figure it Out
As we drill down into the details of ideas for breaking the economic and political power of over sized banks, we need this litmus test against which serious suggestions should be judged: Does a proposal, at the end of the day, imply that Goldman Sachs should break itself up?. . . . If the answer is yes, we are making progress in moving our financial system back toward where it was in the early 1990s, when it worked fine . . . and was much less threatening to the global economy. If the answer is no, we are merely repainting — ever so gently — the deckchairs on the Titanic.
–“Obama’s Plan to Be Judged by a Goldman Breakup: Simon Johnson“; Bloomberg (1/22/2010)
My award for “quote of the week” (even year, at least so far)?
The one above from Simon Johnson, former chief economist at the International Monetary Fund and now MIT Business School professor. In other words: one smart guy!
Even people who agree with his sentiments are likely to be tripped up by the complexity of the undertaking.
They shouldn’t be.
I personally don’t have a blueprint for breaking up Goldman Sachs into say, $20 billion relatively nonthreatening “Baby Sachs” (given its current balance sheet, it would spawn about 30(!) progeny).
But I can think of a great way to come up with one: let them figure it out.
After all, they’re supposed to be smart guys (or at least, they keep telling us).
Just to keep it on the up and up 🙂 . . . let a three-person Super-VIP Commission sign off on whatever Goldman proposes.
My nominees: Paul Volcker, Nell Minow, and Simon Johnson.