Does Anyone Really Care? Admit It.

This week, aside from the horror and hope in Haiti and Conan O’Brien’s defenstration, a little soon to be forgotten group called the Financial Crisis Inquiry Commission held ‘hearings’. Eliot Spitzer et al. assure us that a lackluster dog and pony show with Wall Street CEOs smiling like Cheshire Cats is a good thing.

FCIC should use this first public hearing for two quiet purposes. The primary goal should be to develop information. The subsidiary goal is to put the CEOs on record as to what went catastrophically wrong, which will allow the FCIC to judge their candor as the facts are developed. The FCIC, and the nation, need the utmost candor. The CEOs must testify under oath, as is the norm now for witnesses testifying before the House Financial Services Committee. Precisely because it is the norm it does not impute any wrongdoing to any witness.

Spitzer helpfully provided 10 questions. Krugman was unimpressed.

Well, if you were hoping for a Perry Mason moment — a scene in which the witness blurts out: “Yes! I admit it! I did it! And I’m glad!” — the hearing was disappointing. What you got, instead, was witnesses blurting out: “Yes! I admit it! I’m clueless!”

O.K., not in so many words. But the bankers’ testimony showed a stunning failure, even now, to grasp the nature and extent of the current crisis. And that’s important: It tells us that as Congress and the administration try to reform the financial system, they should ignore advice coming from the supposed wise men of Wall Street, who have no wisdom to offer.

Quelle suprise. Do Spitzer and company really expect Wall Street CEOs to be forthcoming beyond a gee whiz, who knew? Everything Krugman rants about — millions of families damaged or destroyed, mass unemployment, lives devastated. And no one really cares. As long as they have a job. They have health insurance. The Dow is back above 10,000. They’re still in their McMansions driving their Land Rover two blocks to the Food Lion or Safeway. And their unemployed friends are let go and become invisible unless they have the bad form to ask for help.

That’s why Barney Frank’s limp financial reform bill is toothless. He’s got no mojo and everyone knows it. The public is still angry. Polls tell us so. But they’re focused on practical things. Sliding to the ranks of the permanent 10% unemployed is something that can be avoided like the H1N1 virus. Naturally the usual forms will be obeyed. The financial lobbysists (many whom the Stiftung dealt with and back in the day crushed once in a gloriously satisfying victory on House suspension) will scream and holler. We predict they will roll back Frank’s lame bill even further in the Senate. But in truth considering the scale of carnage since 2008 Frank doesn’t even slap their wrists. All this talk about Geithner’s head on a stick re AIG is so, er, bush league. How cheaply the masses are appeased.

Who here takes Obama’s stamping of his feet over a ‘tax’ as an actionable threat? Doesn’t he need to find out what Max Baucus and Oympia Snowe think? Given what he’s done to date from Afghanistan to State Secrets to torture to health insurance, do we really want Obama getting involved at all?


  1. Dr Leo Strauss says

    Grim stuff. CATO still has internal voices of dissent to the tea party/liberty nonsense but they are not loud nor many. And definitely not allowed in public. Scary to think there is an entire cohort of young wingers coming up who don’t really remember who John Gibson was. The Non-Jesus-Loving-Tax-Raisers have always been at war with Oceania Christmas after all.

  2. Comment says

    Spitzer’s question number six is good example his technique – Spitzer likely thinks the CEOs will be noncommittal or in denial that they had firm opinions on bad lenders, but there is no doubt lots of direct evidence that suggests otherwise – from tapes on trading floors and emails btw bankers etc.
    A number of questions are like that – some would be impossible for ceos to answer honestly without opening a new can of worms.

  3. Comment says

    Arguably Goldman is not really a bank – but a hedge fund that cross dresses as a bank and turns tricks from time to time. Spitzer would probably avoid that metaphor, but he knows well that most of those revs come from prop trading and bailouts of Goldman clients like AIG.

    Anyway – the impenetrable arrogance of people like Dimon or the more mirthfull “Gods’ work” Blankfein is quite a challange for the collection of politicians (some are lightweights) asking the question.

    Bill Thomas looks like he’s about to break down at any minute and start crying over some flashback to a perceived slight in his youth.

  4. Comment says

    IMO Spitzer and Krugman both have some points – We guess Spitzer is thinking of developing the kind of politically useful information that he developed against ML and others that help spur public pressure for reform. He could have taken down ML and others at the time and put cuffs on the analysts etc – But he just used the pressure to coerce some reforms. Much of Wall St – esp the meatheads on trading desks – think he was anti business or anti wall street. Tom Donahue of the Chamber flew into rages talking about him –
    He may have been set up with his later problems. Who knows – But in reality he was and is a moderate with some contrarian conservative streaks. In many ways, he is tragic because of his intelligence. He would have been awful in the WH though, which was hiss goal.

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