Two respected Washington, D.C. lawyers — tax expert, finance watchdog, media adviser and occasional Miller-McCune contributor Marty Lobel and Joseph Goldstein of the Mayer Brown law firm — are offering an intriguing way to prevent future financial meltdowns of the subprime sort: A team of academic experts would survey the financial field and warn government of impending problems before they happen.
Here's the nut of the Lobel-Goldstein argument, presented on the Nieman Watchdog/Nieman Reports site:
While everyone is uncertain about what is coming next, we ought to think about what we can do to prevent a repeat crisis next year or the year after. First off, as there was in 1933, there should be another Pecora type investigation into how we got to this state of affairs. And at the same time, we should create an office to identify, analyze and publicize financial market problems before they become crises in the future.
Based on our past experience in government, we think the office we'd set up should be staffed by serious academics on one- or two-year fellowships during which they would be expected to rigorously analyze potential problem areas. They would present their findings to Congress, the administration and the agencies so that they will no longer be able to say, "We didn't know."
Bringing in academics for a year or two would ensure very high quality analyses untainted by a desire to protect a government agency's turf as was done in the 1930s with the TNEC (Temporary National Economic Commission) which resulted in some very effective reforms.
I don't know Goldstein, but Lobel's a connected Washington insider whose opinions carry weight, particularly on the Democratic side of the Capitol. I can't say this academics-to-the-rescue proposal (found in its entirety here) will be part of the new financial oversight regulations Congress will almost certainly pass in the next few months, but Lobel is nothing if not practical. He wouldn't write it if he didn't think there was a real live chance it could get some traction.