Wednesday, April 28, 2010

Why Keep Shielding Wall Street?

Why do you boast of evil, O mighty man? The steadfast love of God endures all the day. Your tongue plots destruction, like a sharp razor, you worker of deceit. You love evil more than good, and lying more than speaking what is right. You love all words that devour, O deceitful tongue.

But God will break you down forever; He will snatch and tear you from your tent; He will uproot you from the land of the living. The righteous shall see and fear, and shall laugh at him, saying, “See the man who would not make God his refuge, but trusted in the abundance of his riches and sought refuge in his own destruction!”

But I am like a green olive tree in the house of God. I trust in the steadfast love of God forever and ever. I will thank You forever, because You have done it. I will wait for Your name, for it is good, in the presence of the godly. - Psalm 52


As I was reading this scripture this morning, I had already begun writing today’s essay about the current financial overhaul bill in Congress, and this passage struck me as being particularly apropos to the discussion.

Not that the Republicans necessarily have wrong motives for opposing the current iteration of the Senate’s proposed bill. I tried reading the bill myself online, but at 1,336 pages of political mumbo-jumbo, quite frankly, life is too short. So I’ll take their word for it that parts of the bill have legitimately objectionable wording and motives in terms of government over-reach and ineffectiveness.

Indeed, more than one culprit exists for what has been dubbed the “great recession,” and Congress' wrangling over yet another controversial "overhaul," along with its current grilling of Goldman Sachs executives, have overshadowed that fact.

But pro-business factions should tread lightly when it comes to protesting attempts at fixing the current mess we’re in, and preventing another one. Allowing banks to invent products and strive for profitability is one thing; failing to acknowledge that our financial system has lost its ability to police itself is another. And isn’t that really the crux of the matter?

Small-government liaises-fair advocates say that restrictions on businesses inhibit economic growth. But what our banking system has perpetrated across the globe this past decade has more than inhibited economic growth – it has decimated it. Surely Wall Street has provided all the proof its detractors need to champion the need for real reform and stricter oversight.

After all, if the Great Recession hasn’t convinced conservatives that big banks do not act in the best interests of our national economy, what will? A real depression? Is that what they want?

Capitalism Is Good, But Not Perfect

No economic system is perfect, and the people who think that’s a heretical statement need to get a grip. True, capitalism happens to provide some of the most logical and balanced methods, incentives, and rewards for good ideas, hard work, and prudent tenacity. But it also has a big sieve called greed that can suck money away from even the hardest working entrepreneurs and ethical industrialists who happen to be caught on the wrong side of a ledger.

Some conservatives claim that we already have enough laws on the books to make sure that the greedy side of capitalism stays in check. But how can they keep saying that today with a straight face? After banks that took TARP money are once again posting billion-dollar profits? After they participated in mortgage deceit which, in collusion with the greed of homebuyers across the country, ended up imploding most real estate markets? After investors lost billions in the stock market free-fall? After unemployment soared to 10%, with most experts saying many lost jobs are gone forever?

Granted, most of the mortgage mess wouldn’t have happened if would-be homebuyers had stayed within their budgets. But if banks hadn’t decided to scrap some of the most logical indicators of credit-worthiness, even the greediest homebuyer would have been forced to either stay within their means or keep renting a while longer.

Institutional investors, too, who actually went to Wall Street looking for quick profits – which only come with high risk – abandoned most measures of due diligence. Their greed translated into banks stumbling over themselves to satisfy a quick-money market, but which came first, the chicken or the egg? Did the banks first propose the high-risk investments, and the investors took the bait? Or were investors badgering their account reps, screaming for banks to package bad loans to sell to them?

Either way you look at it, nobody acted altruistically. The love of money drove the bus off the cliff.

Should capitalists expect us to live with such recklessness as part of the price we pay for a minimally-regulated financial industry? Can we truly continue to give banks and investment houses the benefit of the doubt that they will act in the best interests of their investors and the overall economy without further government oversight? To what extent can we assume that firms “too big to fail” will take the initiative to police themselves and operate ethically and wisely? Remember the difference between intelligence and wisdom? After all, we’ve seen how some of the most intelligent mathematical wizards in the world have been able to craft intricate financial products, but how wise have they been?

And what about the lowly consumer/worker? That economic entity upon which capitalism theoretically rests? Are we supposed to obediently roll with the punches? Are we supposed to be expendable worker bees, helping companies ramp up and create products and then quietly allowing ourselves to be duped and laid off, while our retirement accounts evaporate before our eyes?

Can everyone in a capitalist system be at the top of the production chain, immune to employment ebbs and flows? Can everyone own a business and stake a claim to greater prosperity? Who is supposed to actually produce what inventors and owners want to produce? If capitalism didn’t have rank-and-file workers to actually produce and manage a company’s product, how could anybody make a profit? Where’s the logic in marginalizing the very people upon whose backs most of the money in our economy is made?

Why is Protecting Consumers Bad Business?

So, about Washington’s renewed interest in more regulations for Wall Street: How is protecting consumers bad for business? Wasn’t it actually some Republicans who accurately revealed the deceitful practices in which Democrat-supported bureaucrats were engaged to market sub-prime mortgages to impoverished minorities? Why can’t conservatives start with that noble call and champion the integrity of the entire financial system?

How has what the banks have been able to do benefited our economy? One of the “experts” I heard recently complained that a lot of jobs could be lost on Wall Street if Washington interferes too much. And after I stopped laughing incredulously, I had to ask myself: as if the great recession hasn’t been bad enough? How many people have already lost their jobs? Jobs that only ever paid a fraction of what most Wall Street executives earn, but added up, have made a bit hit on Middle America’s spending power.

At what point does defending somebody’s ability to immorally make money take priority over the general public’s right to enjoy protections for their money? Conservatives like to say that the role of government is to protect its citizenry, but can’t protection include financial safeguards in addition to military might? Especially if, as some experts suspect, what Wall Street perpetrated on our country wasn’t already illegal?

Abundance of Riches

As the psalmist says, the righteous do not trust in the abundance of riches. Not that Main Streeters who are upset over the financial industry’s haughty misdeeds don’t share some blame in the mess that has visited our economy. But Wall Street has lost the trust many people placed in it, mostly because the AIG’s, Lehman’s, and Goldman Sachs’ of the world trusted in the abundance of their riches.

If they can’t learn to say “no,” won't somebody else have to have to say it for them?

No comments:

Post a Comment

Thank you for your feedback!

Note: Only a member of this blog may post a comment.