Thursday, October 16, 2008

Accountability Continued

James Ledbetter expresses sentiments similar to James Lileks about the financial crisis.

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.

It's now been conclusively established that there were "serious deficiencies" in how the SEC regulated Bear Stearns........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.

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.

It's a nice idea, but I don't see it happening for the simple reason that U.S. officials believe they acted completely appropriately. British authorities see themselves as regulators with at least a somewhat adversarial relationship to the industry they regulate. Paulson and his minions are from Wall Street, and deep down they don't really think their old friends need any oversight, so they do their best to design the regulatory framework accordingly. Given that, the current situation is seen as merely an unfortunate burp in the universe; something beyond their control. When you don't think regulation is needed, not doing it is nothing for which to apologize.

This mindset sees the finance men as victims, not perpetrators; they were just doing what any good moneychanger would do under the circumstances. It also explains Paulson's belief that he should be given a pile of our grandchildren's money to do with as he wishes; he's just going to help out some old friends who didn't do anything wrong and got caught in the gears of the system. Why would he need to be sorry for that?

As for the people who got snookered into mortgages they couldn't afford, don't his friends' taxes pay for social programs for them? Are there no prisons? Are there no workhouses?.....sorry about that.....but Ebenezer Scrooge initially didn't see anything wrong with his practices, either. (On the other hand, he would have let the banks sink.) At least the businessmen of that time didn't consider running to the government for help when they screwed up.

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