If so, don’t get too cheerful—it isn’t the kind of lawlessness we
twel– 21 would like to see.
Many writers and analysts are investing significant time and effort in trying to both comprehend and explain the current economic mess to lay audiences around the world. Not all of them—not even all the Nobel laureates in the group—seem to have a clue ... although I do suspect some of that has to do with currying favor with the powerful. And while I haven’t yet come across any writer with whom I agree completely, Bloomberg’s Jonathan Weil probably comes closest. Today’s commentary from him, One Nation, Under Banks With Justice for No One is an excellent example. From deep in the essay, subheadings omitted:
It didn’t matter that investors were buying and selling billions of the banks’ shares without a clue that Merrill had lost more than $12 billion during the fourth quarter. Bernanke and Paulson had a singular objective — to get the Merrill deal done, on time — even if that meant duping the stock market and threatening to fire Lewis as chief executive officer, along with the company’s board.
The best that can be said about Bernanke and Paulson is that they believed the ends justified the means, and that preventing system-wide harm to the world’s financial markets took priority over strict adherence to the law. And yet, if you think they didn’t breach the public’s trust, ask yourself this:
Knowing what we know now, how could you ever trust anything Bernanke says again?
What about Paulson’s successor as Treasury secretary, Timothy Geithner, who at the time was still the president of the Federal Reserve Bank of New York? How could he have been out of the loop? Or was he playing the quiet role of boy wonder?
All this puts the SEC and the rest of the government in a horrible spot. It is a matter of public record that the law wasn’t followed, thanks to Cuomo’s disclosures last week. And yet the agencies and policy makers responsible for enforcing the law are probably powerless to do anything about it.
It would be nice to think that SEC Chairman Mary Schapiro might call for a sincere, thorough investigation. But there’s nothing in her professional background that suggests she has the spine or the nerve to take on a major financial institution, much less a former Treasury secretary or the sitting Fed chairman. ....
That leaves you and me, the American public, with the uncomfortable realization that we are slipping toward a state of lawlessness in this country, all in the name of saving our financial system by creating even bigger banks out of combinations of banks that were dangerously too big already.
Weil rightly blasts Paulson, Bernanke, Schapiro, and Geithner (along with Lewis), but I don’t understand how he can label the climate one of “lawlessness”; he himself states that those responsible for enforcing the law aren’t doing anything about this flagrant violation of it.
It is a clear lack of accountability, and it’s a fine example of what seems to be an inevitable progression in state governance. Laws regulating a service sector are passed in an effort to “protect” consumers and cow would-be cheaters; yet, in that process, honest individuals looking for a competitive edge can find one, only to have their competition protest to the lawmakers and ultimately find themselves being prosecuted for their creativity. Or, if the sector gains enough prestige and/or power, those tasked with regulating them find themselves craving some of that action—and become lapdogs of the industry. Thus are regular individuals’ interests left by the wayside: the political–economics complex flattens us in its expansion, then turns to us as taxpayers to bail out the rich and powerful.
If only we had real lawlessness—paired with accountability—in the financial sector! There would be much more consumer choice in banking services, instead of one-size-bleeds-all under the guise of various pretty logos for banks, mortgages, and credit cards. Consumers would be much more cautious about where they put their money, or the terms they select for large purchases or credit cards. Reputation and word of mouth commentary would once again be powerful tools consumers could wield against institutions—because with real choices, dissatisfied customers could and would go elsewhere.
Yah, I’m a dreamer. But you eleven knew that already ... It’s just frustrating to see someone like Weil be so close to nailing it, then falling apart where it matters most.