Matt Taibbi, Journalist: This is the world we live in now. And in this world, some of us have to play by the rules, while others get a note from the principal excusing them from homework till the end of time, plus 10 billion free dollars in a paper bag to buy lunch. It’s a gangster state, running on gangster economics, and even prices can’t be trusted anymore; there are hidden taxes in every buck you pay. And maybe we can’t stop it, but we should at least know where it’s all going.
We must pay closer attention to our financial services industry or else we will find ourselves in economic crisis after economic crisis. I know: The terms are difficult to understand … collateralized debt obligations, commodity futures, initial public offerings, junk bonds … but we must begin to grapple with them.
Franklin D. Roosevelt, Fireside Chat 6: “The second step we have taken in the restoration of normal business enterprise has been to clean up thoroughly unwholesome conditions in the field of investment. In this we have had assistance from many bankers and businessmen, most of whom recognize the past evils in the banking system, in the sale of securities, in the deliberate encouragement of stock gambling, in the sale of unsound mortgages and in many other ways in which the public lost billions of dollars. They saw that without changes in the policies and methods of investment there could be no recovery of public confidence in the security of savings. The country now enjoys the safety of bank savings under the new banking laws, the careful checking of new securities under the Securities Act and the curtailment of rank stock speculation through the Securities Exchange Act. I sincerely hope that as a result people will be discouraged in unhappy efforts to get rich quick by speculating in securities. The average person almost always loses.”
There is nothing new under the sun. Our banking and securities laws and regulations desperately need an overhaul, just as they needed one in the 1934. But we must be very careful in doing so because there are some very smart financial services people out there who face the loss of significant income, aim to sabotage every meaningful regulatory effort and who will take advantage of any loophole left open for them.
Edward Liddy, AIG chairman: “We cannot attract and retain the best and the brightest talent to lead and staff the AIG businesses — which are now being operated principally on behalf of American taxpayers — if employees believe their compensation is subject to continued and arbitrary adjustment by the U.S. Treasury.”
Do we really want our best and brightest going into the financial services field? I think not. We all need to support strongly all efforts to reign in their salaries. Wouldn’t it be wonderful if our best and brightest chose education, public service (e.g., financial services regulation) or something remotely beneficial to society as careers? While I appreciate the need for a financial services sector to ensure that capital is available to support economic growth, that’s not what far too many of these people are doing. These people are destroyers, not builders.