Why hasn’t President Obama insisted on public hearings over what happened during this financial crisis?
Not a single top executive of a Wall Street securities firm responsible for causing the financial crisis has had the courage or the decency to step forward in front of the cameras and explain to the American people in his own words exactly how and why he allowed his firm to cause the crisis. Both Mr. Fuld and Alan Schwartz, the chief executive of Bear Stearns at the end, in their Congressional testimony blamed the proverbial once-in-a-century financial tsunami. Do they or any of their peers really think this is true?
There may be a way to find out. There is much talk nowadays coming from top bankers ”” Lloyd Blankfein of Goldman Sachs, Jamie Dimon of JPMorganChase, John Mack of Morgan Stanley and even Ken Lewis of Bank of America ”” about seeing how quickly they can repay to the Treasury the TARP money Mr. Paulson forced on them. One precondition of their being allowed to repay the funds should be a requirement that each gives a public deposition and explains, under oath, what truly happened and why.
This piece was given an astonishing full page on yesterday’s New York Times op-ed page. Read it all.
[blockquote][i] Why has Mr. Obama surrounded himself largely with economic advisers who are theoreticians and academics — distinguished though they may be — but not those who have sat on a trading desk, made a market, managed a portfolio or set a spread?
In our view, one of the ways out of this economic conundrum is to have experienced traders — not hothouse flowers — design incentives that will encourage the market to have buyers and sellers meet anew around the proper valuations of assets …[/i][/blockquote]
This is the essence of a way forward. I would, however, add one other criterion to the question in the first para: or [b]have had to make a payroll[/b]. One of the great flaws in current American governance is that so distressingly few people in power have even the slightest idea what it’s like to run a business. In that regard Mr. Romney, despite his other shortcomings, would have been a real relief.
[b]America is about far more than setting spreads[/b], as important as that most certainly is. I say that as a man whose recreational reading includes such things as Homer & Sylla’s [i]History of Interest Rates[/i] (1996); Laughlin’s [i]History of Bimetallism in the United States[/i] (1896), yes 18-96; and Rothbard’s [i]History of Money and Banking in the United States[/i] (2002).
My ‘day-job’ is the production of greenhouse (hothouse?) flowers for direct sale to retail customers. It’s free enterprise in its most raw form, and it’s what has always built America one bolt, or one board, or one begonia at a time. Our customers tell us what’s working, and they tell us when we need to expand. There’s no BS out here on the front lines where success is a moving target at the intersection of our professionalism and customer choice.
Some things we can sell at a nice premium, but by two-thirds of the way through the season we have a pretty good idea of what’s [i]not[/i] working, and why not. That material goes to Farmers’ Market, where I can usually find a price that will send it home with someone else. Other stuff doesn’t find buyers even at a steep discount, so it’s Lone Ranger time … to the dump, to the dump, to the dump, Dump, DUMP.
Proper valuation of assets is crucial, and apart from small businesses most folks avoid that painful discipline as often and as long as possible. This is particularly true in academia — to wit, the numerous departments of “Gender Studies” accounting for far fewer than 1% of all majors at the institution.
These, however, are the sorts of people that Obama and his advisors know, and apparently the only ones. Bill Gates, to stay on the liberal side of the ledger, would certainly make a far better President than Obama, but a narrow majority of Americans wanted a smooth-talking idealogue in office … and that’s what we’ve got. He talks nonsense better than any politician I’ve observed in the last fifty years.
The prevalent disconnect (from economic reality) at the top, however, is proving quite harmful to small business, which provides half the jobs in America, and (for the last generation) 100% of all [i]net[/i] job creation in the country. America’s political class, most especially on the left, is utterly clueless about what it takes to run a business, let alone an economy.
It’s as completely foreign to them as it would for me to attempt giving a technical lecture in Urdu or Tagalog. Elections have consequences, and the current consequences are not pretty.
There are good reasons to critique Obama: by and large he has not done a very good job of reigning in Wall Street. There are, of course, political considerations – Financiers to run both parties. The article makes some strong points, but seems pretty unaware of the politics in Washington. Has the opposition party allowed the department of treasury a staff yet?
Bart seem to assume that running an economy is like running a business. Running an economy is a bit different: it includes the rule of law, contracts, non-governmental organizations and the variety of political interests at stake. The leadership required to run a corporation is naturally different than governing a democracy. Steering an oil tanker is a lot different than a sailboat.