To the editor:
I would like to thank Mr. Wexler for his response regarding Corzine and Menendez. Full disclosure, I am a Republican and supported neither man. But let me agree and then disagree with the cause of our “great recession.”
There is this political mythology that the financial troubles were the result of rapid deregulation and implying there was no government bank oversight. I disagree, from the SEC to the self-regulatory agencies, to the state regulators there were plenty of regulators watching, but just watching is the key point. These “too big to fail” banks were and are under constant monitoring.
Now where I agree is there was broad bipartisan support for what the banks were doing, which was facilitating. The financing of our $1 billion deficits as far as the eye can see. While the Federal Reserve Bank can print money out of thin air, the banks must lend it into the system. The fact that banks got carried away and made bad loans or involved in unwieldy derivatives was acceptable collateral damage but then it got out of control and threaten the entire financial system, requiring the bailouts.
But back to the myth, if there was so much malfeasance and criminality then where are the prosecutions? Recall the “free market” President Reagan and the saving and loan scandals of the 1980s. Reagan’s administration aggressively charged and prosecuted thousands of cases and people went to prison.
Compare that with the strong regulator and interventionist, President Obama and the lack of prosecutions. We are talking trillions not billions of dollars and yet where are the prosecutions? Why not?
The explanation is simple, the “banksters” were doing what the government wanted and needed to be done to finance the great and continuing deficits that allow all Politicians to get re-elected. Adding another layer of Dodd Frank regulation isn’t going to work. It’s time to cut spending and out of control borrowing. Break up the “too big to fail” banks into smaller responsible banks, ones that can fail if they make stupid loans.
Regards,
Bruno Di Stefano
