Nicolas Véron is a research fellow at Bruegel, a Brussels economic think tank that started operations in 2005. With initial training from Ecole Polytechnique (Palaiseau, France) and Ecole des Mines in Paris, he has a background in both public policy and corporate finance. In his early career, he worked for the Saint-Gobain Group in Berlin, at Rothschilds' mergers & acquisitions department in Paris, and at the office of the state representative in Lille in the north of France. Between 1997 and 2000, he was the corporate adviser to France's Labour Minister. He then became chief financial officer of MultiMania / Lycos France, a publicly-listed internet company (2000-2002), and in mid-2002 founded an independent financial-services consultancy based in Paris. Véron's publications include policy papers published by Bruegel, most notably on banking supervision, sovereign investment, rating agencies, the financing of high-growth companies, international accounting standards-setting, and the internationalisation of large listed companies; as well as Smoke & Mirrors, Inc.: Accounting for Capitalism, a book on accounting in a changing financial system (Cornell University Press, July 2006). Since March 2005 he writes a column on business and finance for La Tribune, France’s second-leading business daily.
My question would be, is the Obama Plan’s proposal to give the Fed the mission to supervise systemically important financial firms (‘Tier-1 Financial Holding Companies) compatible with monetary policy independence? … Read more
Barack Obama’s announcement today, if implemented, will represent significant change for financial regulation in the US. At first sight, three aspects are particularly important. First, the “systemic” authority given to the Fed has the potential of closing the many loopholes that existed in the previous system. What remains to be seen is how aggressively the Fed will exert this authority, and whether it will clash with its monetary policy mandate and independence. Second, the resolution authority is an important new development and will greatly facilitate the management of future crises, even though it also comes with its own practical… Read more
Direct majority ownership in GM will obviously be tricky for the US government to manage well. But remember that Sweden was a competent manager of the banks it nationalized in 1992-93. Even France, in spite of many failures, has been occasionally successful in letting companies it controlled develop in ways that made business sense. The Obama administration has made it reasonably clear that it expected GM to restructure, so while it remains to be seen how much downsizing will be done, it is unambiguously part of the mandate. Let’s also not expect the Feds to be overly passive investors,… Read more
Labor statistics are notoriously difficult to compare, as national systems vary a lot when it comes eg to prison inmates, the disabled, and other difficult-to-classify categories. That said, the fact that unemployment presently appears to be higher in the US than in Western Europe, for the first time since the early 1980s (source OECD / Horst Siebert), is thought-provoking. In my opinion, at this stage it merely signals the intensity of the economic shock. If you accept the conventional wisdom that the US adapts more quickly to changes in the economic environment, it is to be expected that America's unemployment… Read more
There is no easy and elegant solution to this quandary. Expect a bit of volatility. If no large bank is found insolvent (or to use the same euphemism as the Treasury, in need of additional capital), the markets will not believe the tests are credible, and the reaction may be very difficult to manage. If on the contrary the results are really bad – say, more than half of the 19 tested banks are found insolvent – then it’s the Treasury’s responsibility to prepare the marketplace. The recent signals being on the positive side (“most US banks have… Read more
Simon Johnson is right in his core diagnosis. Regulatory capture has been all too ignored as an enabler of the crisis. Shifting the public conversation towards it, as Johnson does, is an important and welcome contribution. However, as he recognizes, "everyone has elites", and a purely anti-oligarchic agenda is unlikely to be of much help in solving the current mess. Of course, very little of this is new. Machiavelli masterfully captured the oligarchy question's complexity when writing: "I maintain that those who blame the quarrels of the Senate and the people of Rome condemn that which was the very origin… Read more
An assessment of the London Summit must be based not only on what the most pressing issues of the moment are, but also on what the G20 can and cannot achieve given what it is. There are important issues on which the G20 is structurally unable to deliver, because it is too large, too diverse, or simply because such issues cannot be dealt with multilaterally at the level of heads of state and government. The London Summit was a success, not because it solved all the problems – it didn’t – but because it went nearly as far as it… Read more
Nothing in what has happened in the past eighteen months or so suggests that the basic tenets of capitalism as we know it have been altered. As things stand, our economic systems will continue to rely on companies generally started by entrepreneurs, whose equity is generally held by private-sector entities, and which generally compete with each other for revenue and profit. Companies will still need to rely on a complex financial system to access the capital they need. Even after the humbling experience of the past months, there is no superior framework available to channel humankind's economic impulses and activity.… Read more
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