While watching President Obama's news conference I found myself feeling a deep sense of satisfaction. The President outlined a new tax on large banks who he referred to as being the primary cause of the current economic crisis. With news reports of multi million dollar bonuses being paid out to executives who's lending institutions were bailed out by the taxpayers many Americans feel they were being taken as fools for helping save these companies. After seeing the devastation in the eyes and homes of average average American I am one of them who felt a sense of betrayal.
Negotiating daily with lenders and experiencing their indifference towards their customers and the attitudes and actions they engage in suggests they feel immune to paying any consequence for their actions. Telling customers to stop paying their mortgage in order to get a loan modification severely damages credit, and the banks care not. Taking a short sale approval all the way to closing just to disapprove it at the last minute damages the customers credit and finances for 10 years, and the banks care not. Nor do they appear to carryany liability for their actions. Apparently the attitude of indifference and immunity we experience on the front lines with bank negotiators starts at the very top levels of the institutions.
The free market capitalists on CNBC and other news stations are likely to decry the big government intervention into the free market. The cries from Wall Street over limitations on executive pay have been continuous ever since the president appointed pay Czar, Kenneth Feinberg. This appointment, in response to news of huge new bonuses to bailed out bank executive, was intended to stem the outcry from tax payers to the practice of rewarding failure. Again the banks attitude of indifference and immunity keeps them from getting the message. I really thought they were the smartest people in the world, the best of the best, the greatest America had to offer. Now? Not so much. Such a smart group not getting it at this stage of the game.
I am a free market believer myself. That is to say that each individual in a free market may not have the capacity move the market but given the collective intelligence of millions of individuals operating independently the best solutions and innovations occur. Unfortunately the banking system is not a free market. It hasn't been since The Federal ReserveAct of 1913. More recently big banks have had their way withcongress as well. Really. When the head of the House Banking Committee is sharing a bed with a high level banking exectuve what do you expect? And that is not to say that Barney Franks love life is at fault. It points to a larger picture where big banks and big government scratch each others backs. For the banks they get the advantage in the market place and for the big government types they get more money and more power. They all had so much power that they thought they were immune....until the free market caught up with them.
So while I am still a free market believer I am taking a great deal of satisfaction in knowing that the fat cats that broker their influence with congress are getting piched by the very instituion they went to to gain billions in profits. Maybe they will get the picture this time and the attitudes will improve but I doubt it. It took decades for this to wind up and will decades to wind down, if ever. For the Wall Street gang there's a moral to the story. When you sleep with dogs you wake up with flees. Happy scratching.
Ken Crotts
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