Book of the week: 13 Bankers: The Wall Street Takeover and the Next Financial Meltdown by Simon Johnson and James Kwak

(Pantheon, 320 pages, $26.95)

Simon Johnson is “the economist Wall Street loves to hate,” said Steven Syre in The Boston Globe. Two years ago, when the world economy was approaching collapse, Johnson left his post as chief economist at the International Monetary Fund to start attacking America’s biggest financial institutions. His popular website, The Baseline Scenario, has advanced his case that the financial crisis was caused by an oligarchy of bankers as dangerous as any he’d seen in corrupt Third World countries. Now comes a book whose prescription is simple: Six to 13 of the financial giants must be “smashed into smaller pieces,” in order to break their stranglehold on Washington and the U.S. economy.

Johnson and his co-author, James Kwak, offer an argument that’s “too crude to be convincing,” said The Economist. While today’s Wall Street is undoubtedly “the most powerful and concentrated financial sector” that the country has ever seen, it’s not nearly as concentrated as those in other developed nations. Early on, 13 Bankers ominously sketches a March 2009 meeting, at which the CEOs of 13 top financial institutions joined the Obama administration’s economic team to discuss recovery plans. It would “spoil the tale of villainy,” however, if the book acknowledged that the banks’ influence is due more to factors such as campaign finance law, rather than simply the institutions’ size. As for solutions, the suggestion of capping every bank’s share of U.S. domestic product at 2 percent or 4 percent would hardly be a cure-all.

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Even so, there’s great appeal in the brute elegance of this remedy, said James Pressley in Bloomberg.com. Complex regulations will only create loopholes that Wall Street can take advantage of, the authors argue. They also “debunk arguments that curbing the size of banks is too simplistic.” Johnson sees knocking down the size of the biggest banks as only a first step, but a necessary one. And anything would be better than the inaction of the past 12 months, which has merely allowed banks to grow stronger and the risks to the economy graver. “It’s time for practical solutions. This might be a place to start.”