Krugman writes about the new OMB director Jacob Lew.

So Obama’s nominee to head OMB told a Senate panel that deregulation didn’t lead to the financial crisis. Urk. I think he may technically be right -- it wasn’t so much deregulation as the failure to extend regulation to keep up with financial innovation that did it. Still, talk about stepping on the message.

And this gets to a point I’ve been trying to formulate: while the Obama’s political problems are largely due to a lousy economy, it’s also true that the administration seems to go out of its way to alienate its supporters.
...
In fact, it often seems to me that there’s an almost compulsive aspect to the administration’s anti-dog whistling. Maybe it comes from hanging out with the political and business establishment, which leads to a desire to seem respectable by dissing the DFHs. But memo to the president: Wall Street will hate you anyway. All you’re doing is undermining the enthusiasm of people you need.

After the Iowa primary, I was for Obama and against Hillary. What Krugman fails to mention is that Lew is/was Hillary's budget guy. He was a Clintonoid like Larry Summers and Robert Rubin.

I don't begrudge Obama for relying on Clintonistas for advice - they know how the Federal government in all of  its complexity works. But they did come from a deregulatory mileu, something Krugman fails to mention. And you have to wonder if they've learned their lesson, especially when Jacob Lew makes such a fundamental mistake.

Krugman's right that technically it wasn't deregulation which caused the crash - DeLong insists repealing Glass-Stegall didn't help cause the crisis. But as he says in the quote above " it wasn’t so much deregulation as the failure to extend regulation to keep up with financial innovation that did it." It was a deregulatory bias which did cause the crisis, something members of the Clinton administration enabled.

Were they going to regulate the shadow banking system while deregulating the plain old vanilla banking system? I don't think so. But Krugman is right in that Jacob Lew here doesn't seem to get it and the Obama people should have prepared him.

Sometimes it seems like DeLong and Krugman bend over backwards and/or go out of their way to defend Bill Clinton. When you consider the Clintonistas' political opponents like Newt Gingrich, John Boehner, George W. Bush, Mitch McConnell, Sarah Palin, Fox News, Rep. Paul Ryan, Rep. Eric Cantor, etc. it's difficult to begrudge them.

I should mention Krugman was discussing a news story by the Huffington Post's excellent business reporter Shahien Nasiripour.

The media gets criticized all the time but I believe journalists Neil Irwin, Sewell Chan and Nasirpour have been doing an exemplary job this past year.

Update: the more I think about what the new OMB nominee said, the more it pisses me off. Fed Chair Ben Bernanke testified to the Financial Crisis Inquiry Commission that the guy to read on the crisis is Gary Gorton. The other day Yglesias pointed to a new paper by Gorton on financial regulation. From the abstract:

We first document the rise of shadow banking over the last three decades, helped by regulatory and legal changes that gave advantages to the main institutions of shadow banking: money-market mutual funds to capture retail deposits from traditional banks, securitization to move assets of traditional banks off their balance sheets, and repurchase agreements ("repo") that facilitated the use of securitized bonds in financial transactions as a form of money.

Shouldn't Jacob Lew, former executive at Citigroup and budget director for Bill and Hillary, know this?