Here’s the Conservative’s version of accountability today: DON’T BLAME ME.
At the top of the “don’t blame me” crowd is Alan Greenspan. He’s also on top of the “free-markets-work-but-let’s-prime-the-pump-anyways” crowd. Currently he’s deflecting criticism of his tenure at the Federal Reserve by pointing to greed and, incredibly enough, the fall of the Berlin Wall. If we listen to Greenspan his “Let’s make ‘W’ look good” interest rate policies at the Fed had little to do with the bubble economy and rampant speculation. People are expected to act rationally, even if you hang a “For Sale … Almost Free Money” sign up.
Also at the top of the “don’t blame me” crowd is the CEO of Bear Stearns, Alan Schwartz. He argued in front of Congress that market “rumors” and wild “speculation” drove his company into the ground. What could he do once irrational actors fed themselves on rumors of his company’s impending insolvency, right? What he conveniently ignored is that he allowed his company to build a debt-equity ratio of 8: 1 (with rumors of a 32:1 ratio) when the industry average is on the heavy side of 3:1.
The crazy thing is that, for many conservatives, letting Greenspan and Schwartz off the hook because of the “irrational exuberance” of others only makes sense. It’s the borrowers and homeowners who should have known better.
AND YOU AND I PICK UP THE TAB …
But you want to know what the real crazy thing is? If we listen to Alan Greenspan, Alan Schwartz, and other conservatives, unregulated industry, rampant speculation, and market irrationality by the big players are simply to be tolerated – it’s all part of the market game. We shouldn’t worry ourselves about brokers, underwriters, and financial institutions who pushed and sold products with little consideration for the borrowers capacity to pay.
Indeed, why should the financial industry be pushed to do their job and pursue “due diligence” when Congress can write laws that force Americans to pay for industry greed. Don’t believe me? Check out the 2005 Bankruptcy Bill. And besides, if things get really bad the taxpayer can always be expected to pick up the tab for the big players in the form of billion dollar bailouts from the Federal Reserve.
This “let the wage earner/tax-payer pick up the tab” mind-set is so prevalent no one is paying attention to F.B.I. investigations into what they are calling “substantial” mortgage fraud. This mind-set also explains why Congress will not allow bankruptcy judges to re-write mortgage loans, no matter how inflated and fraudulent the terms were. In this mind-set, homeowners must pay the costs of predatory practices and market deception. The big guys, however, get bailed out at taxpayer expense.
NOTHING COULD BE DONE …
So this is what we have from the Greenspan and Schwartz mind-set. Greed and rumors are to blame for everything going on in the market. Case closed. Indeed, according to Alan Greenspan, nothing could’ve been done to prevent current market conditions because even with the “authority to intervene, it’s not credible that regulators would have been able to prevent the subprime debacle.”
What’s ignored by Greenspan here is that regulators had nothing to do with shoving cheap money into the economy. Also ignored is that the hands of regulators were tied by deregulation and incessant budget cuts (due, in part, to the republican tax-cut jihad). In order for Greenspan’s comments to be credible one has to suspend the capacity to reason. Think about it. If we let criminals loose from our prisons, stopped pursuing gang-related activities, and cut law enforcement budgets in half, would crime levels remain the same? My friends, regulation matters.
Still, demonstrating that his ability to suspend logical reasoning isn’t limited to absolving himself from blame for current market conditions, the former chair of the Fed is now offering a rather uncreative solution to the disorder he helped create: Let the market work its way through the current mess.
Hey, I have an idea. If we really want to fix the mess we created in Iraq, Why don’t we invade Iran, and do everything just like we did in Iraq? And for good measure, let’s hire Donald Rumsfeld to run the show. I hear he’s not doing anything ...
DON'T BLAME ME …
So here we stand, suffering through yet another set of central bank orchestrated rescues of financial institutions (which Greenspan has a history of signing on to), and watch as less than honorable “don’t blame me” executives escape investigations into their speculative and irresponsible predatory lending practices.
You know, the more I think about it, “Don’t blame me” may be the least of our problems. Someone should really be looking into how these government escorted bailouts are helping an industry stave off investigations and prosecutions that would help make one thing crystal clear: Asset inflation, fraud, bubbles, predatory lending, and market busting speculation at the levels we see today tend to occur when markets are not regulated.
But don’t blame me for this bit of news. And, please, don’t blame me because the conservative’s blind obedience to failed policy ideas makes regulatory prescriptions necessary.