I have to admit I don’t know any sheep farmers, but even I know that it’s not customary for these folks to ask the wolf for suggestions about protecting the sheep. Questions about fences and guard dogs are not something about which the farmer would consult with the predator. This is not horse (or sheep) sense. It’s just plain and simple common sense.
That is why I have to laugh whenever I read in the mainstream press about how Wall Street, meaning the big banks, is “resisting” new rules and tighter regulations in the aftermath of the catastrophic meltdown that the Street brought about.
My response to this “resistance” is quite simple: Who’s asking them what they think? And why?
It doesn’t take an Einstein to figure out who the predators were in the events of the last few years. And it certainly doesn’t take a genius to know who the prey was!
Yet, here we are a year after Lehman Brothers collapsed and we are no closer to tougher regulation for these predators than we were before.
Can I understand that Wall Street would “resist” being overseen more stringently? Of course.
But in point of fact, the Street through its reckless machinations and “innovations” nearly brought this country’s and the global financial system to the very edge of the cliff. The only reason all of us weren’t dragged along with Lehman was that the government pulled out all the stops to prevent it.
Since it was the government that saved the butts of almost every major Wall Street firm and big bank, the government should be calling the shots when it comes to creating a system where these firms don’t carry us to the brink again.
It’s a year later and here we are (in typical American fashion) marking the first anniversary of Lehman’s demise. And we’re doing it almost as a historical exercise. I fear we have already forgotten just how terrifying last September was and the stomach-churning that marked day after day of failures and bailouts.
There is yet another pocket of resistance to stricter regulation, greater consumer protection and restructuring the financial regulatory system, and that comes from the very regulators who failed us so terribly in the lead-up to September 2008. None of these banking regulators wants to give up turf—not to another regulator or to a new agency with the express mandate of protecting consumers.
My reaction both to Wall Street and Bernanke and Co. is ‘tough,’ a word the street knows and respects.
So I hope that President Obama is tough and means to follow through on his stern message to Wall Street on Sept. 14. Speaking to those who “are misreading this moment” and “are choosing to ignore” the lessons of Lehman, the president said, “We will not go back to the days of reckless behavior and unchecked excess at the heart of this crisis, where too many were motivated only by the appetite for quick kills and bloated bonuses. Those on Wall Street cannot resume taking risks without regard for consequences, and expect that next time, American taxpayers will be there to break their fall.”
After what’s happened I don’t believe that firms should even have the option of “choosing to ignore” the past. Recklessness and malfeasance have to have their consequences.
Settling for anything less, and especially to placate Wall Street, is the equivalent of putting the farmer inside the fence, while the sheep are left on the outside with the wolves.