Is Arrogance and Whining Required to be in the Financial Industry?

Yes, It’s The Financial Executives' Major in Their MBA Program

After many years in which bank regulators looked the other way, the U. S. banking system collapsed in 2008. It was so bad that Conservative Republican President George W. Bush had to propose a massive bailout of the banks.   That bailout required taxpayers to pony up with the funds necessary to keep large banks and financial institution from going belly up.

Going forward both the United States and European countries that had experienced the same situation moved to impose new regulations on the financial industry.  The 2008 meltdown was not the first problem with the banks.  In fact, for all of their history banks have wrecked havoc on economies with their practices that put greed and mismanagement ahead of everything else.  Finally in the 1930’s the abuses were so bad that the government had the political capital to impose strict controls on bank investment practices.

Now the reaction of normal people who had managed banks during the last debacle would be mostly humiliation and appreciation.  Humiliation for what they had done and appreciation for the bailouts that saved them.  But bankers are not normal people, in fact some of them may not be people at all.  So far from being grateful and accepting regulation as the proper course they are outraged, outraged that the public would dare question their practices.  Paul Krugman has a nice piece on this here.

The CEO of J.P. Morgan Chase displays this attitude in an interview with the Financial Times.  Here’s what Mr. Jamie Dimon says



How Bankers View Bank Regulation



“I’m very close to thinking the United States shouldn’t be in Basel any more. I would not have agreed to rules that are blatantly anti-American,” he said.

That’s right, the regulations that would make his bank act responsibly are “anti-American”.  And Mr. Dimon wants immunity from past practices that even he admits were defective

“He said he was ready to agree a settlement over lax servicing and foreclosure standards that is expected to see the industry pay $20bn in penalties. But he said banks could not be placed in “double jeopardy” and needed an appropriate release from legal liability”

That’s right, banks now want government to give them a release from legal liability.  In return, the banks will do what?

Later in the same issue of the Financial Times we hear from Steven Schwarzman, CEO of investment fund Blackstone.  Mr. Schwarzman is worth a gazillion dollars, and is known for, among other things his lavish spending.  His chef, Mr. Zeugin reports



Two Claws - $80.00 - That's Why Stephen Schwarzman
Can't Pay More in Taxes



“He expects lunches consisting of cold soup, a cold entrée such as lobster salad or fresh grilled tuna on salad, followed by dessert, Mr. Zeugin says.

He eats the three-course meal within 15 minutes, the chef says. Mr. Zeugin says he often spends $3,000 for a weekend of food for Mr. Schwarzman and his wife, including stone crabs that cost $400, or $40 per claw. (Mr. Schwarzman says he had no idea how much the crabs cost.)”

Here’s what Mr. Schwarzman has to say about current economic policy.  First he plays the “class warfare” card.

“This problem began when the administration sought to attribute blame for the financial and economic crisis and alienated large segments of the business and banking community. They cast them as villains regardless of their culpability. Predictably, business reacted with fear and limited economic expansion, hiring and new lending. A second response to this was the rise of the Tea Party, which in turn attacked the administration and the Democrats. Unless we end targeted class warfare in the US, we cannot solve our economic problems or stop a long period of potential decline.”

Wow, the problem is not the collapse of the financial system under Mr. Bush, it is the fact that the Obama Administration actually blamed the banking community for the problems the banking community created.  He hurt their feelings and so the business community joined en mass to stop the economic expansion.  And does everyone notice that any criticism of these who deserve criticism but are wealthy is “class warfare”.  Of course, cuts in programs that benefit working men and women and reduce benefits for low income or elderly or disabled are good fiscal management, that's not class warfare.

As for what to do about the economy, well Mr. Schwarzman graciously includes himself in the solution

“Broad-based tax reform will put everything on the table, from the rates we pay at every bracket to serious thinking about a flat tax regime with few or no deductions. Entitlement reform of Medicare, Medicaid and Social Security will affect the benefits we receive and the amounts we all have to contribute.”

Let’s see, a flat tax will benefit who, well Mr. Schwarzman for sure, and entitlement reform will harm, well, not Mr. Schwarzman, that’s for sure.  And his contribution to Ssocial Security, well because of contribution limits its probably not even one hundreth of one percent of his compensation.  And we don't think Mr. Schwarzman will  have to worry about Social Security for his retirement or Medicare for his health care.

So what you do mean by “we” Mr. Schwarzman, oh, we know, you mean everyone else except yourself and billionaires.  After all you need your money for those $40.00  crab claws.