Question: Can financial regulation help grow the economy?
Steven Rattner: I don’t think we have any choice but to have financial regulation, better financial regulation, more financial regulation. If we learned anything from the recent crisis, it’s that the financial system is the central nervous system of the economy and of the country. And we cannot allow it to simply run amuck. So, will that mean that the financial sector won’t grow quite as quickly or won’t be quite a profitable? Perhaps. But I think we’ve learned the consequences of, of not having that regulation are way greater than whatever we might sacrifice by having it.
Question: What’s the state of the U.S. economy today?
Steven Rattner: We’ve had not just a recession, but a financial crisis followed by a recession, or accompanied by a recession. And economic historians will tell you that that’s a much more severe form of illness than a sort of run-of-the-mill sort of recession. And therefore the recovery period is longer, it’s harder, and that’s what we’re experiencing now. We are in a recovery, I don’t believe we’re going to have a double-dip recession, but the growth trajectory is definitely on the slow side. And most worrisome, of course, the unemployment rate is just not coming down very fast. And the number of new jobs is just not going up very fast.
I don’t have a magic wand to wave over this problem. I don’t have a silver bullet to fire at it. I think the President’s policies are as good as it gets. I don’t have a better set of policies, particularly when you have to compromise and you have to deal with Congress to move the ball forward. So I think the Federal Reserve has been extremely accommodating and supportive of recovery, and I think we need to give it a little bit of time. I think we need to try to restore confidence in this country so that people will go back to spending money and back to work and companies will start to hire again.
Recorded September 23, 2010
Interviewed by Victoria Brown