10-16-2008, 06:36 AM
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#27 (permalink)
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Psycho
Location: the center of the multiverse
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Speaking of taking responsibilty for this mess that we're all in...
Quote:
Someone Actually Apologized!Why will no American take responsibility for this mess?
By James Ledbetter
Posted Wednesday, October 15, 2008 - 3:40pm
When Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke were trying to shove a bailout plan—any bailout plan—through Congress, there was a lot of mostly Republican rhetoric along the lines of "This is not the time for finger-pointing" and "Let's not play the blame game."
If the GOP doesn't understand why Americans don't trust them on the economy, here's a hint: We want someone to blame. We want an explanation for why the systems in place failed miserably. We don't need public beheadings, but if neither Washington nor Wall Street will take responsibility for the greatest financial crisis in 70 years, how can anyone be assured that it won't happen again?
The lack of American accountability became stunningly clear today, when Hector Sants, the chief executive of Britain's Financial Services Authority—the regulatory body that's sort of a cross between the United States' Securities and Exchange Commission and Federal Reserve Board—actually apologized for not preventing the meltdown that effectively led to the nationalization of Britain's banking sector.
"We're sorry that our supervision didn't achieve all it should have done," Sants said in a speech in Edinburgh, Scotland. Specifically, Sants said that the U.K. government should have put more pressure on bank directors to prove that their business models were sound.
The FSA had plenty of company. It's now been conclusively established that there were "serious deficiencies" in how the SEC regulated Bear Stearns. An inspector general's report found that the SEC was aware of "numerous potential red flags prior to Bear Stearns' collapse, regarding its concentration of mortgage securities, high leverage, shortcomings of risk management in mortgage-backed securities and lack of compliance with the spirit of certain [international reporting] standards, but did not take actions to limit these risk factors."
Yet SEC Chairman Christopher Cox still has his job and has yet to acknowledge that his agency did anything wrong—or, indeed, to say anything germane about how the crisis came about, aside from blaming short-sellers. (He did issue a statement saying that voluntary regulation doesn't work, skipping conveniently over the fact that the Bush administration pushed through the very voluntary program he cited.) Would acting on these red flags have prevented the collapse of Bear Stearns and shone a critical light on similar flaws elsewhere? There's no way to know. Would apologizing bring it back? Of course not. But it shouldn't be this hard for the officials, public and private, involved in the destruction of hundreds of billions of dollars of wealth to admit that something went wrong and promise to better in the future. It's ironic that with the scope of the crisis so vast, we get less in the form of accountability than we'd expect from a minor felon in a sentencing hearing or even a celebrity going into rehab.
Part of the problem is certainly that this is an election year; for Bush officials to admit that they were, at best, asleep at the regulatory wheel could create a ballot-box accountability that they'd like to avoid. Denial and evasion are also hard-wired into this administration; they didn't want to play the blame game during Hurricane Katrina, either. It seems Chris Cox is doing a heck of a job.
But there's a broader cultural problem, too. We have come to expect failure to be rewarded on Wall Street; we saw a few days of outrage on Capitol Hill about golden parachutes, even though the unspoken truth, now confirmed in today's New York Times, was always that Wall Street executives will continue to rake in tens of millions a year whether or not taxpayers own their stock. Now that same unaccountability is supposed to cover regulators, too.
Is there a way out of the culture of unaccountability? Hey, if Paulson can imitate the British bailout and offer direct capital infusions into shaky banks, maybe our officials can take a page from the Brits. Admit that you screwed up, and tell us you're sorry. It's a start.
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Someone Actually Apologized! | The Big Money |
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