Accountability II

A Bill Moyers/Michael Winship article in Huffington Post on the financial crisis brings up some excellent points, starting with advice to the Tea Party activists to be not "so single-minded about just who's responsible for all their troubles, real or imagined." Meaning: stop blaming Obama and join the outcry against Wall Street, the big banks, and the financial wizards who were in charge but now claim, along with Alan Greenspan, that no one could have foreseen what happened.

To Robert Rubin, who apologized for missing "the powerful combination of forces at work and the serious possibility of a massive crisis," Moyers and Winship say:

Okay, maybe you didn't have a crystal ball. But what about good, old-fashioned business sense? How could you make so much money and not know the score? . . . Citi paid you $120 million as a senior advisor and rainmaker and you're not responsible for knowing what's happening below you? You didn't bother to assess the risk you were peddling to clients?

In truth, a few wise economists did see it coming. And what about the investment managers who saw the risk, played the odds, and got out just in time? Like fund manager Michael Burry (this blog 4/7) who "waited for the lenders to offer the most risky mortgages conceivable to the least qualified buyers." Then he pulled his investments out, because he knew it was the end of the bubble. He knew the risk, took advantage of it, and got out in time. He knew.

And this:

The hedge fund called Magnetar . . . worked with . . . investment banks to create toxic CDO's -- collateralized debt obligations -- securities backed by subprime mortgages that management knew were bad. Then Magnetar took that knowledge and bet against the very same investments they had recommended to buyers, selling short and making a fortune. To simply call all of this "creative accounting" is to do it an injustice. This is corruption, cynicism and greed on a scale that would make the Roman Emperor Caligula cringe.

And now the executives and advisers claim to be surprised that it all came tumbling down? How could they not know the risk? Where along the way did business ethics fall over-board?

And yet the Republicans -- all 41 of them in the Senate -- have signed a pledge to filibuster the regulatory bill that is before the Senate. Obama has pledged to veto legislation if it does not regulate these derivatives.

The battle is on. It should be a classic Wall St vs Main St battle. Which side are the Tea Partiers going to be on? It's going to be quite a trick to be anti-Obama and anti-Wall St at the same time, but that seems what the Republican strategists are trying to pull off by distorting the bill, just as they did with health care.

Wake up, people !! It's important to understand what is happening !!

Ralph