Shades of the Middle Ages
Watching and listening to the Congressional inquisitions this past week, I had to believe that the Academy Awards needs to add a new category called Best Congressional Performances. Of course it would be difficult to decide whether the performances should be considered under Comedy or the Drama categories.
The righteous indignation and wrath displayed by the key players was great theater, of course, and played well to those political populists who still don’t understand that it was this very same Congress that forced these institutions go into the sub-prime mortgage business against their wills in the first place!
This was the same Congress that repealed the Glass-Steagall Act of 1933—legislation which had prevented the banks from taking risks that were limited to the securities industry—and permitted the banks and securities firms to merge and do all the things they’re now being castigated for.
Securitizing those loans was simply a matter of risk-management for these institutions, as was going short when the bottom started to fall out—entrepreneurial innovation employed to help them survive under circumstances their inquisitors had forced them into in the first place.
And you can bet, had they not taken whatever steps were legally available as were these, the failure of these institutions would have brought down the wrath of all parties on them for failing to take the steps necessary to protect their shareholders!
But it sure pleases this ignorant, bloodthirsty crowd to see the icons of capitalism taken down to their level!
Don’t get me wrong! I don’t countenance either greed or unethical practices; and I’m on record with some pretty strong feelings about that. But, if there’s anything that ticks me off more than a captain of industry turned pirate, it’s our hypocritical and fiscally illiterate lawmakers!
