According to Hendrick Hertzberg’s writeup of a recent New Deal 2.0 event, some of the critics of the administration’s approach to the banks are shifting to an interpretation of what’s happening that’s closer to what the administration’s friends are saying:
Stiglitz said he has the impression that while the Administration’s policymakers are familiar with the approach he and Solow advocate and have discussed it among themselves, it hasn’t been given the kind of in-depth consideration that has been extended to the solutions preferred by the big banks. “When push comes to shove,” Solow said, “politics wins over economics every time. It’s the unanswerable objection: ‘You can’t get it through Congress.’”
I totally get this. What I’m not sure I do get is why, if the administration’s had the ability to convince a large swathe of outside analysts that congressional politics are making a highly sub-optimal response necessary, we’re not seeing more signs of an effort to persuade congress that this is a problem.