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Simon Johnson: Wall Street's Stranglehold on Our Democracy Must Be Broken

The progressive economist talks about the fight to reform Wall Street, what Robert Rubin should do with his money, and why Jamie Dimon is the most dangerous man in America.

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Actually, Jamie Dimon may be the most dangerous person in
America
today. He's dangerous because he's good. I fear the collapse of Citigroup, and I find Goldman Sachs more entertaining than anything else. They really help us because they aggravate so many people. But Jamie Dimon is smart. Jamie Dimon keeps his head down, and Jamie Dimon keeps getting bigger. Even if you think Jamie Dimon is a fantastic guy, and a savvy businessman, whatever the president said about him, which I'm not taking a side on. Jamie Dimon will not be running J.P. Morgan Chase forever. He's already lining up his successor, in fact. Whatever you think of John Reed and Sandy Weill at Citi, the fact is, they were succeeded by Chuck Prince, who was a disaster.

Every business eventually falls into the hands of somebody who doesn't know what they are doing. That is particularly true in finance, and it is particularly true at big financial institutions. So I think it's safe to say Jamie Dimon is the most dangerous man in
America
.

ZC: There is a very strong culture of hero worship in finance, not just on Wall Street but in the Federal Reserve. People view the Fed Chairman as this great golden god who descends from the clouds to speak to the monetary multitudes.

SJ: Yes, he's like the adventure hero in some King Kong movie.

ZC: At least with Alan Greenspan, and the way his reputation has changed so dramatically in the last three years, is it safe to say that this idolization is a bad thing?

SJ: This is sort of a secondary point to our main theme, but Federal Reserve reforms are very important. There should be term limits on the Fed Chairman and the Fed Governors, and you should change the Sunshine Act to the extent that it applies to the Fed. The Sunshine law says that if you have more than three Fed Governors meeting at any time, it has to be subject to public notification.

Over the past few years, Ben Bernanke, Donald Kohn, and Kevin Warsh were the inner core, and everyone else was basically ignored, and to be honest, not that important. That's a mistake. It feeds into this whole policymaker-as-hero idea which is very dangerous in a democracy.

ZC: You've mentioned Citigroup a few times. What should Robert Rubin do with all of his money?

SJ: Robert Rubin is the most interesting person and the most important character for the country to understand in this crisis. What he thought, when he thought it, why he pursued these deregulatory policies when he was at the Treasury during the 1990s, what he was doing or dreaming about when he was supposedly in charge of governance at Citi. The way he viewed the world, and the way Greenspan viewed the world, is largely responsible for what just happened. How that has changed, if at all, is very important.

ZC: I'm not a fan of his policies at Treasury, but whatever you think of them, he was one of the few people who stayed on at Citi for the entire mess. 

SJ: And a figure who has slipped below the radar. But here's what he should do with his money. My kids love Colonial Williamsburg. And I think Rubin needs to take page from John D. Rockefeller here and go out and restore some historic banking place and create a living museum where people can go around and learn about and wear the clothes of people from this crazy era. I'm being a little facetious here with
Williamsburg
, but my daughters like to wear the clothes of 18th-century Virginians. But some place where you could wear the clothes of 1990s American bankers, and play in financial markets and make them crash. That'd be wonderful.