LACK OF FINANCIAL REGULATION? APPARENTLY, IT'S OUR FAULT
I admire Gretchen Morgenson of The New York Times -- she's angry about financial abuses and she puts that anger into her work, like this very good Times business-section story about a judge who declared a mortgagee utterly free and clear of any debt when it turned out that the people who were dunning the borrower couldn't produce the basic documentation proving that they held the mortgage.
But over here, in the Week in Review section, she seems to be suggesting that we're not getting real financial reform because we schmucks in the general public are too dumb to understand real reform. She's writing about efforts to rein in executive pay by Kenneth Feinberg, the pay czar:
... The white-hot focus on pay, for example, looks like a way for the government to reassure an angry public that they are making genuine changes. But compensation is a trifling matter compared to, say, true reform of derivatives trading.
"The American public understands the immorality of paying people huge bonuses for failures that damaged the economy," said Michael Greenberger, a law professor at the University of Maryland and a former commodities regulator. "What they don't understand is that those payments are only a small fraction of the irregularities that took place and that, in essence, the compensation problems, as bad as they are, are a sideshow to the casino-like nature of the economy as it existed, pre-Lehman Brothers, and as it exists today."
It is difficult enough for seasoned regulators or market professionals to assess whether various reform proposals will close pernicious loopholes and make the financial system safer. But for a crisis-weary public, such an analysis is almost impossible. Much easier to grasp are the cuts to executive pay announced by Kenneth R. Feinberg, the Treasury official in charge of setting compensation at bailed-out companies.
Really? Try us.
Require these folks to forgo bonuses if their get-rich-quick schemes come crashing down a few years after a quick kill. Require institutions to have greater cash reserves, as a hedge against losses (rather than always using us as a hedge against losses). Require that the bizarre stuff be traded on public exchanges that permit oversight. Or just go for it: bring back Glass-Steagall.
The public may not understand any of this? Here's what the public would understand: the angushed howling of fat cats. Whatever they want? We're against it. We'd get that.
Or most of us would -- as it is, the Glenn Beck zombies don't even understand the notion of curbing excess bonuses at companies that took huge amounts of money from the government. Remember? Beck -- the great populist -- opposed the effort to go after AIG's bonuses last spring. And his minions have clearly absorbed the talking points: in that recent Greenberg Quinlan Rosner focus group of wingnuts (PDF), one far-rightist described attempts to curb these people's excessive pay as a threat to ordinary citizens -- no, really:
I don't want the government to own banks. I don't want them to own the car companies. I don't want them to own Wall Street. I don't want them to tell you how much money you can make. If you work hard they'll take it, they'll take it.
That's what these idiots think: We are all AIG executives.
Look, the White Hoise and congressional Democrats should just do it -- they should just get serious about regulating the bastards. And if they don't have the guts to do that -- or don't really have any intention of doing it (which I think is the real problem) -- they and supposedly sympathetic observers shouldn't compound the insult by blaming their failings on us.