Shooting Ourselves in the Foot
Matt Taibbi has another entertaining and informative article on financial reform:
The Sanders amendment, if it survives in conference, will lead to some delicious disclosures. Almost exactly a year ago, Sanders questioned Bernanke at a Senate-budget hearing, asking him to NAME the banks that had been bailed out by the Fed. Will you tell the American people to whom you lent 2.2 trillion of their dollars? Sanders demanded. After a little hemming and hawing, a bored-looking Bernanke — Time magazine s 2009 Person of the Year, by the way — bluntly said, No. It would be counterproductive, he explained, if clients and investors learned that these poor banks were broke enough to need a public handout. Bernanke s performance that day so rankled Sanders that he wrote up his amendment specifically to bring the Fed s goblin-in-chief to heel. The new law will force Bernanke to post the identity of loan recipients on the Fed s website for all to see.
via Politics — Latest News — Wall Street s War — RollingStone.com. [Emphasis added]
This isn’t the language of someone trying to make things better, it’s the language of an internet troll looking for cheap thrills. The only problem is, as satisfying as it would be to see all those “crooks”, “goblins”, and “vampire squids” squirm, it’ll hurt us more than it hurts them; the executives responsible already have years of paychecks, vacation homes, yachts, and whatever else tickled their fancy.
Seeking vengeance doesn’t change the facts: “It would be counterproductive, [Bernanke] explained, if clients and investors learned that these poor banks were broke enough to need a public handout.” Matt is very entertaining, but also idiotic. It’s not the poor banks Bernanke’s worried about, it’s the government money he just gave them. At the time, people would have shorted those “poor companies” if they were identified as most in need of bail out. If, like Matt, we just wanted to watch the industry burn down, it would have been cheaper not to hand them our money we poured gasoline over them.
You may not like the bailout, but the fact is that it happened, and that the people running the show at the time made the very defensible judgment call that it was necessary. Let’s stop trying for juicy “reform” meant to unearth more entertaining fodder for edutainment authors, and actually focus on boring-looking, fixing things for the better reform.