Arrogance Beyond Galling

To get an idea of just how arrogant today’s titans of Wall Street are read Bankers Without a Clue, NY Times Op-Ed, 1-15-10.

The writer, Paul Krugman, points out two moments that “stood out” during the first day of testimony on Wednesday when investment banking big shots were questioned before the Financial Crisis Inquiry Commission.

“One was when Jamie Dimon of JPMorgan Chase declared that a financial crisis is something that “happens every five to seven years. We shouldn’t be surprised.” In short, stuff happens, and that’s just part of life.”

Regarding this pathetic statement Krugman notes: “But the truth is that the United States managed to avoid major financial crises for half a century after the Pecora hearings were held (in the wake of the Great Depression) and Congress enacted major banking reforms. It was only after we forgot those lessons, and dismantled effective regulation, that our financial system went back to being dangerously unstable.”

And here’s the second gem: “Still, Mr. Dimon’s cluelessness paled beside that of Goldman Sachs’s Lloyd Blankfein, who compared the financial crisis to a hurricane nobody could have predicted. Phil Angelides, the commission’s chairman, was not amused: The financial crisis, he declared, wasn’t an act of God; it resulted from “acts of men and women.”

Was Mr. Blankfein just inarticulate? No. He used the same metaphor in his prepared testimony in which he urged Congress not to push too hard for financial reform: “We should resist a response … that is solely designed around protecting us from the 100-year storm.” So this giant financial crisis was just a rare accident, a freak of nature, and we shouldn’t overreact.”

Krugman then points out how starting in the late 1970s deregulation and the greed is good ethos started to doom our economy. “There were ever-greater rewards — bonuses beyond the dreams of avarice — for bankers who could generate big short-term profits. And the way to raise those profits was to pile up ever more debt, both by pushing loans on the public and by taking on ever-higher leverage within the financial industry.”

I urge you to read Bankers Without a Clue. Just do it on an empty stomach.

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