Simon Johnson, British-American economist, former Chief economist of the International Monetary Fund blogs at Huffpo this morning, announcing a Wall Street Journal report that today the President will announce a plan to be presented to Congress to restrict Mega-bank size, restrict complexity, and restrict risk-taking.  Johnson  dubs his column  "Paul Volker Prevails."

Volker, legendary Fed Chief under Carter, was re-appointed by Reagan, and according to Joseph Stiglitz was fired by Reagan for not being enough of a fan of de-regulation.  Volker has gotten more of the reform bug recently, and has called for the re-instatement of Glass-Steagal as a bare minimum starting point to re-regulate Wall Street.  He was appointed to Obama's Economic Recovery Board, but has been marginalized so acutely by the White House that he stopped coming into his White House office; he said his portfolio of tasks was so small he could work from home.  (And presumably save car fare.)

Johnson says that the White House will spin this new announcement as one the White House has been working on for some time (snicker, snicker) but that the record speaks for itself.

Johnson lists 4 things to watch for in the plan the President presents to Congress:

1. Does the president provide a clear statement of why we need these new limits on banks? The administration's narrative on what caused the crisis of 2008-09 has been lame and completely unconvincing so far. The president must take it to the banks directly - tracing the origins of our "too big to fail" vulnerabilities to the excessive deregulation of banks following the Reagan Revolution and emphasizing how much worse these problems became during the Bush years.
2. Are the proposed limits on the total size (e.g., assets) of banks, or just on part of their operations - such as proprietary trading? The limits need to be on everything that banks do, if they are to be meaningful at all. This is not a moment for technocratic niceties; the banks must be reined in, simply and directly.

Is there a clear strategy for (a) taking concrete workable proposals directly to Congress, and (b) win, lose, or draw in the Senate, running hard with this issue to the midterm elections?

Stay tuned; but for now I am glad that the Prez may be getting Coakley's message about her loss being driven in large part by Obama's failure to reign in Banks.

We will hope that this isn't another feint like his banking fee plan was.  Lots of economists will have his back on this one if it is a good, strong plan.

Update:  Here's the WSJ's take on The Plan the President just announced; it's bitchy, but what would we expect?

http://online.wsj.com/article/SB10001424052748703699204575016983630045768.html?mod=WSJ_hpp_MIDDLETopStories