Week InReview: October 21, 2016
Interview of the Week - The IMF's Managing Director Christine Lagarde held a Sunday morning breakfast chat with Michael Lewis, best-selling author of The Big Short, about the U.S. housing bubble and the 2007-08 financial crisis, and Liar's Poker, based on his experience as a Wall Street bond salesman in the 1980s. Asked by Lagarde whether the behavior of big banks had changed since then, Lewis said there had been some progress-for example in compensation and reducing proprietary trading by big institutions - but that big problems remain. Lewis advocated for putting more women in senior financial roles to offset the effects of "male over-confidence." He also noted the difficulty of communicating to the public on sophisticated financial issues. He said outsiders like him can help institutions like the IMF explain complex issues in simple terms. "I can speak about these things in looser terms. But if you try to communicate with people who know nothing whatsoever about finance in a way they will understand, it would cost you with the people you have to deal with every day." "We deal with finance ministers, we deal with governors of central banks, who themselves are hostage to their own governments first, and to public opinion and the next election," Lagarde said. "We need to... reach out to public opinion, to explain what the positive outcomes and the benefits could be of doing this, that, or the other."
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