I'm not willing to go as far as Hoover's Treasury Secretary Andrew Mellon is reported (by Hoover) to have gone:
"Liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate. It will purge the rottenness out of the system. High costs of living and high living will come down. People will work harder, live a more moral life. Values will be adjusted, and enterprising people will pick up from less competent people."As things stand we are going to have the virtuous (savers) bailing out the sleazeballs (bankers) for at least another five years as the Fed plays their interest rate game to re-liquify the banks' balance sheets.
Is it time to put the Great Recession behind us?I've got no love for Warren either. She's just another sleazeball, in this case of the Learjet Liberal variety.
Not in terms of the economy -- which remains bogged down with high unemployment, low growth and other aftershocks -- but rather when it comes to demanding a rigorous effort to hold Wall Street bankers, traders and executives accountable for their role in causing the financial crisis.
Should we just chalk it up to such simplified explanations as “animal spirits ran amok” and “these things happen occasionally”? Or should we continue to expend scarce political and law-enforcement resources trying to get to the bottom of what happened, and why, with a goal of holding the right people legally and financially accountable?
It’s a conundrum, especially since many Americans have lost enthusiasm for the fight. But the path we ultimately take will reveal to us and the world much about who we are as a people and what ethics, values and morality we stand for. It will also have serious lasting implications if we hope to avoid a rerun of what happened over the last five years.
At the moment, the message we are broadcasting far and wide is: There will be no justice; there will be no accountability; let’s return to the status quo as quickly as possible.
There are, not surprisingly, powerful and articulate voices in favor of moving on. In his book “Unintended Consequences,” Edward Conard, a former Bain Capital partner of Mitt Romney (who is willing to say the things Romney wouldn’t dare and has given $1 million to a political action committee that supports the Romney campaign), argues forcefully that occasional market collapses such as 1929 and 2008 are a small price to pay for a system of capital allocation that has produced vast sums of wealth, extraordinary technical and financial innovation, and an incentive system that rewards people handsomely for taking risks.
For better or for worse, Conard writes, this is the country that produced Apple Inc. (AAPL), Google Inc. (GOOG) and Facebook Inc. (FB), among the most admired corporations in the world. Conard believes the sooner we get back to untethering Wall Street’s animal instincts the better. That means modest regulation, at best, and an end to any efforts at meting out justice for those personally responsible for the financial crisis because, hey, stuff happens.
Likewise, in a recent speech at the Council on Foreign Relations in Washington, Jamie Dimon, the chairman and chief executive officer of JPMorgan Chase & Co. (JPM), returned to many of his favorite themes. One was how little he cares for much of what is in the Dodd-Frank law and the proposed Volcker Rule which limits banks’ ability to trade for their own account. He reiterated his belief that the right kind of financial regulation is necessary, in the vein of laws preventing drunk driving. But, like Conard, Dimon said the new regulatory environment is holding back economic growth.
He said he had discussed the topic with business owners and executives around the country: “They all say it’s terrible. So it’s not just banks. We’ve done it to ourselves, folks. We’re shooting ourselves in the foot and we’re doing it every day. Get rid of that wet blanket and this thing will take off.”
Even Lloyd Blankfein, the chairman and chief executive officer of Goldman Sachs Group Inc. (GS), has started to make noise again after a few years of laying low. As part of what the press has nicknamed his No Apologies Tour, which has taken Blankfein to forums and media outlets across the country, he has also called for jettisoning the wet blanket. “Getting rid of some regulations and rules that are impairing people from investing vast pools of liquidity that are on the sideline, that are not owned by the government, that are theirs to invest but are just sitting on the sideline” will help get the economy humming again, he told CNBC.
The Wall Street Journal reported last week that while the rest of us have moved on when it comes to the nitty-gritty details of what, say, the Volcker Rule will end up looking like when it is finally written, lawyers and lobbyists for Wall Street firms are working the regulators over with renewed intensity. JPMorgan Chase and Goldman Sachs have spent, respectively, $12.7 million and $8.3 million since the passage of the Dodd-Frank law in July 2010 on lobbying the regulators who are still drafting the final regulations. Goldman asked last week for an exemption for certain investments from a Volcker rule proposal that would limit a bank’s total investment in hedge and private-equity funds to 3 percent of Tier I capital. Why? Goldman makes a boatload of money investing this way.
On the other side of the debate are people like Elizabeth Warren, the Democratic U.S. Senate candidate from Massachusetts, who still believes that accountability for the bad behavior that occurred years ago on Wall Street is essential....MORE