What Paulson, Bernanke, Geithner and Neil Irwin Don’t Get

The ten year anniversary of the Great Crash is upon us, so we can expect a spate of media reports fighting the wars all over again. Here’s one by the New York Times writer Neil Irwin, discussing the justifications offered by Hank Paulson, the Treasury Secretary under Bush, Timothy Geithner, the Chair of the New York Fed and then Treasury Secretary under Obama, and Ben Bernanke, the Chair of the Fed. One word that doesn’t appear? Crime. Also not mentioned: “foam the runway”.

The justification offered by the Big Three is the same tired explanation we’ve heard over and over. We had to save the financial system, or, as Irwin explains it:

The goal was not to try to reinvent Wall Street on the fly, but to keep the flow of capital coursing through the global economy while minimizing the depth and duration of the recession that the crisis had caused.

They claim success by this standard. But they ignore the fact that tens of thousands of small businesses were cut off from credit, and individual borrowers were pushed to the wall. And, millions of people lost their homes in disgusting foreclosures waved through by judges utterly indifferent to the requirements for proving up mortgage claims. The legal system failed the people it was supposed to protect, and no one was held accountable. But at least Geithner and his allies foamed the runway for the filthy rich and the bankers.

Irwin defends the actions taken in pursuit of the purported goal of “saving the financial system”, saying that they worked. The economy isn’t perfect, but inflation is relatively low, and while job gains were low, the current unemployment rate is 3.9%. Irwin ignores the fact that competent economists expected low inflation, and doesn’t mention that the share of the population with jobs is still down over two points from the peak in 2000 among those aged 25-54, and still not back the pre-Crash levels 10 years later. His glib skimming over the 10-year slow increase in jobs ignores the lost wages, and ignores the low pay and insecurity of the new jobs.

Irwin thinks that the problem was that the trio of leaders did not manage the politics correctly. They did nothing to help homeowners, because, according to Irwin, the political environment was toxic, citing the usual suspects, Rick Santelli and the Tea Party. Bernanke cites long-term trends, “…stagnation in middle-class wages, social dysfunctions, rising mistrust in government and hostility to immigration”, but that has the feel of both-siderism when everyone knows it was driven by the right wing. Irwin accepts this explanation.

Again, nowhere in this piece does Irwin talk about crimes, fraud, cheating, or corporate wrong-doing. I agree that the problem was political. The Obama Administration, specifically Eric Holder and his deputy Lanny Breuer, refused to conduct criminal investigations into the people who lied, cheated and stole from the investing public and the millions of people cheated in mortgage transactions. The pointless and stupid civil cases were slaps on the wrist of banks, and hardly dented the returns to their shareholders. Not a single banker went to jail, despite overwhelming evidence of fraud.

This is not just a political failure. It’s a moral failure. Obama decided to absolve the bankers who committed crimes, and in doing so clarified to the American people that we have a two-tier system of justice. The rich and powerful are coddled. Everyone else is beaten into the dirt by the legal system. It’s not the salvage operation the holy three managed that drives the anger; it’s the lack of accountability. Explaining the salvage operation gets a lot easier when people see a steady stream of guilty pleas and massive fines and forfeitures.

Sure, I’m angry. But I’m not angry about saving the financial system. I’m angry that the bankers stole the money and got away with it.

49 replies
  1. Rapier says:

    The US Treasury sold (thus borrowed) $1.05 Trillion dollars (*) of Treasury securities last month. The mechanisms to do this are completely and totally entwined with the worlds banking giants who are de facto partners of the Treasury and the Fed.

    The banks own the place because the government cannot function without the financial system funding the deficit.

    Of that amount $259 billion was new borrowing, meaning the holders of paid down securities repurchasing new ones accounted for the rest.

    • Ed Walker says:

      As we know, that is a political choice. When you remember that the point of capitalism is to insure returns to capital, you understand that choice.

      • Rapier says:

        Huh? Or which or what was a political choice? I am firstly talking about the mechanisms of the financial economy.

    • jonf says:

      Yes, banks work with the Fed and Treasury to facilitate the sale of bonds. We decided someplace in the past that we needed to sell bonds to fund our spending, if there were not enough tax money . In reality it is not needed, the Fed could easily mark up the Treasuries account with a few computer key strokes. But the Wise Men of the past decided that won’t do.

      You may be aware that the Fed now holds some trillions ( I believe around 4 Trillion) from purchases of bonds  in QE 1 through 3 or 4. I keep wondering why they don’t simply burn it???  Wait, I suspect they keep it in the event the nation’s elite want some more safe investments at a cheap price ( after interest rates go up). /s ?

      • Xboxershorts says:

        Don’t we hold these treasury auctions twice a month and don’t they facilitate international trade? I thought that was the reasoning behind the US being the reserve currency for international trade.

        • Ed Walker says:

          Yes, we hold these auctions regularly. And yes, they facilitate international, but that is not their primary purpose. Foreign banks can hold dollar reserves in Treasuries or in dollars, but Treasuries pay money. That makes the banks in countries with trade surpluses natural buyers of Treasuries in the auctions and in the secondary markets.

          But the real winners are US banks which can buy Treasuries using funds borrowed from the Fed. They make a profit on the spread, or they can sell in the secondary markets if that would produce a higher return.

      • bmaz says:


        This is what you have? You are coming here, in this moment, to bitch about Hillary?

        Come back when you have something useful for the moment at hand. Otherwise you are wasting time.

        • Alan says:

          Point taken. Sure we can bitch about or Hillary, Paulson et al. or persons  BTL and none of this gets us very far. If you want to understand the crash(and understand why Paulson et al. “don’t get it”, where we are now, and where we may be heading we need to stand back and take a look in a more dispassionate way at the political-economic history. For the crash we need to understand the emergence of transantional financialization, centered primarily on the North Atlantic banking system, that emerged following the collapse of the Bretton Woods in the 1970s and the financial degregulation that followed in the Thatcher-Reagan era. For analysis see Peter Gowan’s article in New Left Review: <a href=”https://newleftreview.org/II/55/peter-gowan-crisis-in-the-heartland”>Crisis in the Heartland: Consequences of the New Wall Street System</a>. Additional discussion <a href=”https://adamtooze.com/2018/07/05/framing-crashed-ii-2008-the-crisis-of-the-national-macroeconomics-and-the-revolution-of-macrofinance/”>here</a>.

  2. Alan says:

    Agreed. I thought Iceland was the only place to have jailed bankers but apparently bankers were jailed in the US. See, for example, 35 bankers were sent to prison for financial crisis crimes. But this hardly refutes the core of the argument. It just appears that there was a two-tier system of justice when it came to jailing bankers. Small fry were fair came but the big boys were too big to jail.

    In the UK I suspect none of the bankers associated with the 2008 financial crisis went to jail and the UK has continued with hardly a hiccup as a center of financial crime and money laundering. Dark and dirty money is what drives their politics and their economy.

    • Ed Walker says:

      The crimes in that article are post-Crash. They involve theft of TARP funds, lies about bad loans and similar crimes. No one from any of the major banks involved in the transactions that led to the Great Crash went to jail. The only possible exceptions are from a mortgage originator, Taylor, Bena and Whitaker. That article is stupid.

  3. Bob Conyers says:

    There’s a moral hazard, you see, when people who were pedaled impossible mortgages are given the means to renegotiate instead of bankrupted and foreclosed on.

    But when you prosecute the people who created fraudulent financial products and broke their fiduciary duty in the process, you’re stifling innovation and threatening the foundations of business as we know it.

  4. Peterr says:

    Former UK Prime Minister Gordon Brown shares your anger, and he also worries that next time will be worse:

    Since the crisis, banks have been forced to hold more capital to protect them against possible losses, and a system of bonus clawbacks has been introduced to dissuade bankers from taking too many risks.

    But Brown said action against financial malpractice had not been tough enough and that banks would expect to be bailed out again in the event of a future crisis.

    “The penalties for wrong-doing have not been increased sufficiently. The fear that bankers will be imprisoned for bad behaviour is not there. There has not been a strong enough message sent out that government won’t rescue institutions that haven’t put their houses in order.”


    Recalling the freezing up of the financial markets a decade ago, Brown said governments had sought to compensate for the lack of trust between banks by cooperating more closely.

    “In the next crisis a breakdown of trust in the financial sector would be mirrored by breakdown in trust between governments. There wouldn’t be the same willingness to cooperate but rather a tendency to blame each other for what’s gone wrong.

    “Countries have retreated into nationalist silos and that has brought us protectionism and populism. Problems that are global as well as national and local are not being addressed. Countries are at war with each other on trade, climate change and nuclear proliferation.”

  5. Rapier says:

    RE;” I keep wondering why they don’t simply burn it??? Wait, I suspect they keep it in the event the nation’s elite want some more safe investments at a cheap price ( after interest rates go up). ”

    I want to be nice but this makes no sense at all. None, It is gobblety gook, nonsense.I don’t even know where to begin. Then again it’s impossible for someone with no credentials to discuss these things and be heard by liberals. Well except for that MMT thing wherein even the very best liberals, Duncan Black, who has an MS in Economics, stomps his feet and says the Treasury can ‘deposit’ a trillion dollar coin into it’s bank account and write checks on it. No it can’t or won’t, or can’t and won’t until a law is passed.

    And it sounds so wonderful, lot’s and lot’s of money to do nice things. The problem is a shortage of money is not our problem. To say it is is to negate humanism.

    • square1 says:

       … says the Treasury can ‘deposit’ a trillion dollar coin into it’s bank account and write checks on it.

      No it can’t

      Yes, it can.

      or won’t,

      That part is true.

      or can’t and won’t until a law is passed.

      The laws permitting the Treasury to mint platinum coin are already on the books. Minting platinum was a totally legal procedure which would have satisfied both the obligation that Congress imposed for certain spending and the obligation not to incur additional debt.  Those who rejected such a plan demonstrated a lack of understanding of how fiat currencies work, an irrational embarrassment at the thought of a trillion dollar coin, and insufficient creativity to consider more politically palatable solutions, such as minting 1 million $1MM platinum coins.

  6. Peacerme says:

    At the risk of sounding like a therapist let me add, that this situation squeezed Americans in the cruelest of ways. Sadistically. Much research to support that the stress of these mortgages increased health problems related to stress. Add the health care crises where a health problem meant thousands of dollars that these folks did not have. This stressed the health care system. .rwjf.org/en/blog/2014/04/harvard_school_ofpu.html

    I did not lose my house. I still have it. But I nearly lost my life. I ended up septic with 4 surgeries in one year AND having lost my job (as they laid off our entire team from a job I had for 12 years), started my job own business (gratefully successful today) it felt like I was fighting for my life, not just my house. The breadwinner and mother of four kids. My family, many people around me have no real idea of how these three currents, mortgage crises, health care crises and my health intersected to nearly wipe me out. I hurt because I know people died. I know people of color, and less fortunate than I, went through worse and likely lost their homes.

    • Tracy says:

      Peacerme, thanks so much for sharing your story!

      Since joining this site, I have seen that the other side of the mass incarceration of blacks/ minorities is the opposite side of the coin of the nearly total unaccountability for white collar crime.

      And the wealth differential in our country just grows and grows, and gets worse and worse with every corporate-wealthy-skewed Supreme Court decision like Citizens United, with every Mitch McConnell devious move to install right wing judges, with every Republican tax “reform” (ha ha ha, the biggest joke), and Republican voting rights gutting that increases voter suppression. It’s a cycle that gets worse and worse.

      And then there is the gaslighting of a whole section of the population who watches Fox News, or votes entirely on “social issues” along w/ evangelical base – people who are HARMED by the corporatization of America who are fooled into supporting corporate interests by voting for a Con President and an agenda that will make their life worse.

      It’s so frustrating sometimes and hard to know where to start to change things.

      Anyway – I was moved by your story, and I think a lot of people are/ have been there!

    • earlofhuntingdon says:

      Indeed.  It harms people in vast numbers, but the crimes are just that bit removed from the victims so as to make it seem harmless.  Unlike, say, making an illegal copy, which is so harmful the USG lends it logos to and pays for ads for private industry.

      In manufacturing days, the comparison used to be the proverbial worker, who took his car home, bit by bit, in his lunch box, which was considered a devastating attack on his employer.  Never mind the quietly alcoholic senior manager, whose serial incompetence caused millions in losses.

      In today’s criminogenic business atmosphere, the ratio of losses is much greater.  Given how much of it is ignored by the state, and how low the penalties are when caught, crime is now a standard part of the business model.

    • Ed Walker says:

      I agree that the Great Crash caused horrible emotional and physical toll on working people. That is never considered by the elites and certainly not by the Holy Three. The damage brought out the worst in some of us, like the sadist Rick Santelli, who ranted about money for homeowners and student loan borrowers, encouraging the other sadists to join in beating them into the dirt. And then the economists demanded austerity, joining the sadist party.

      Social cohesion disappeared, aggravating the problems facing the real victims of the Great Crash.

  7. earlofhuntingdon says:

    We need another level of hell for billionaire CEOs who fund schools – “where the child will be the customer.”

    These efforts are never about charity or education.  If they were, Jeff Bezos would not keep his workers in cages and digitally track every move they make, while relegating their toilet breaks to the most convenient empty water bottle.

    These efforts are about aculturation and dominance, a simple variation on l’etat, c’est moi.

    • Trip says:

      So agree, @earl. It’s just another level of playing god. They get to decide who lives and dies, or who benefits and who is harmed. It’s absolute shite. I have stopped doing business with Amazon, although it’s not always easy since they own nearly everything.

      • Tracy says:

        That’s a great idea!! No more Whole Foods (Whole Paycheck), I guess… I mean, how can Amazon also own our food now??

        I was driving along today trying to look for mom&pop shops and they are just becoming increasingly rare – most things are chains or corps now…

    • earlofhuntingdon says:

      Jeff’s commitment:

      “We’ll use the same set of principles that have driven Amazon. Most important among those will be genuine, intense customer obsession….The child will be the customer.”

      A common Irish curse to a trouble child: “May you have a child just like you.”

      Paraphrasing for Jeff:  “May you work for eternity, pulling items in a warehouse just like yours, as Rowan Atkinson’s devil, Toby, might say, without relief.”

  8. J R in WV says:

    I am a capitalist, the son and grandson of capitalists, with econ and finance classes in college, my own investments since high school. Also was a deck ape in the USN and a blue collar worker by choice, before the college and software career.

    I didn’t really understand the whole crisis until “The Big Short” was published and the movie released. It (both the book and the film!) was gritty exposure of what was going on, how all the participants knew it was unethical, immoral, AND illegal and how the government regulators were standing aside numb.

    I don’t know how much money was made by those who saw the crisis coming and managed to force the huge investment firms to create instruments to invest short in the coming crash, but it was mega billions of dollars. And it was a near thing, as they were losing money hand over fist until the crisis began unfolding and those banks’ and investment firms’ values began to drop like an elevator with no failsafes.

    I don’t think anyone who hasn’t seen the movie and read the book can possibly have a valid perspective on the whole series of events.

    • Ed Walker says:

      With your background, you might really enjoy ECONned by Yves Smith. She explains the details of the transactions, but she also puts it into a broader perspective, focusing on the role of economists in the whole mess.

      • readerOfTeaLeaves says:

        Completely agree.  Particularly her section on the hedge fund Magnetar.  Basically, people gaming the financial system made billions.

        And economists enabled it all; the high priesthood of physics dressed up as economics, with a heartless, ruthless, inhumane logic.

    • Xboxershorts says:

      You also want to watch and read Inside Job, it touches not only on the crimes committed, but also the formulation of thinking that went into the deregulatory steps that preceded the Mortgage Bubble. The role of think tanks and academia and the flow of funding between those two that ensured the publication of and acceptance into mainstream, the policies that allowed banks to gamble with depositor funds or insurance companies to write policies for assets that no one know there value or how dismantling the domestic oversight of Commodities Futures Trading Commission and setting up largely monitored Commodities futures desks in London, Dubai and NY and how that took a 2 Trillion Dollar domestic mortgage bubble and exported that into a 20+ trillion dollar International Securities Bubble

      When protest signs read “Jump you F*&^ers”, that was an accurate depiction of the mood of the populace. But the banking system was able to successfully hide behind the layers and layers of manufactured complexity and thus….avoid direct scrutiny. With help from media and other allies.

  9. Jonathan says:

    It’s important to remember that TARP was unnecessary and had absolutely nothing to do with saving the financial system. There was only one day when the financial system was in imminent danger — when a money market fund that had invested in Lehman bonds for its clients, could not pay clients back at 100 cents on the dollar after it had to admit to losses on its Lehman paper. At that point, money fund shareholders began cashing in en masse, and corporations, which depended on short term debt (ie., commercial paper) to manage day to day operations, were out of luck. Hit by huge, precipitate withdrawals, the money funds could not buy commercial paper and the corporate issuers of such paper faced the prospect of running out of liquidity.

    At that point Paulson did the only thing he could, which was to guarantee the holdings of money market funds. That stopped the bleeding immediately.

    TARP was simply a transfer of money from taxpayers to failed banks. What Paulson should have done, was to use all TARP funds to sufficiently capitalize the FDIC, which then, according to time honored procedure, could have taken at least some of the insolvent banks into receivership. Regarding the insolvent banks, precedent would have dictated that senior managers get fired (if not jailed, depending on what they had done) bank shareholders should have been wiped out, and only insured depositors protected. In other words, FDIC protection should have served the purpose of protecting depositors, but not as blank check for bad bankers to get rich off taxpayer funds.

    I can’t believe how many people keep repeating the canard that TARP was needed to “save the system.” It’s flat out wrong.

  10. holdingsteady says:

    Peacerme, I want to say thank you for sharing your story, my family went through a scary period too – we were doing a remodel in which a balloon loan (construction loan) nearly popped… we got out just in time. I likened it to being in the canyon like in the movie Deliverance. We trusted bankers and luckily it worked out…I know others had it much much worse.

    Thank you Ed Walker for bringing this post and ensuing discussion, justice has not been done and I don’t understand why Obama and Holder didn’t do more at the time. I wonder if Obama will ever discuss it, or has he? I’ll never forget the pitchforks comment, it was like a gut punch.

    • Tracy says:

      Holdingsteady, thanks for also sharing your story, it’s good to read your words.

      I was thinking about the fact that Obama had literally just come into office when this happened (or vice versa) and how it’s a lot to just walk into as a new president (particularly a young and rather inexperienced politician). I’m not an econ person or presidential historian – in fact, I was serving in the Peace Corps abroad during this time, but I certainly hope that this many years later Obama wishes he’d held people accountable. This does seem like a big failing in his administration – and I hate to say (b/c I love Obama and find him v inspiring) that he still does not acknowledge (I just watched his hour-long speech at U of I) that despite the larger economy improving, this did not show up in everyone’s life equally. Which, in part, (so many factors!!), led to the insurgence of DJT.

      Here was a recent NYT opinion on how better to measure economic growth than GDP, “For Whom the Economy Grows:”


      Thanks for sharing your story!

      • holdingsteady says:

        Tracy, interesting link,  I hadn’t known about the Schumer/Heinrich effort to drill down into the data rather than just accept the GDP average.  I liked Krugman’s simple analogy from the NYT opinion piece:

         If Jeff Bezos walks into a bar, the average wealth of the bar’s patrons suddenly shoots up to several billion dollars — but none of the non-Bezos drinkers have gotten any richer.

        And the Vox article he links to, describing Schumer’s bill in more detail, is interesting too.  Even though the bill won’t pass anytime soon, it’s nice to know they’re trying to delve into the truth about the inequality in a way that would make it data based and undeniable.

  11. sand says:

    How did we get here again?

    1. Banks loaned money to people they knew couldn’t pay it back.
    2. The people didn’t care because, hey, free money, and the banks didn’t care, because they sold the loans to others. (So far, so good.)
    3. Business was so good that they gave up on keeping paperwork. (Wait, shouldn’t they keep a copy?)
    4. The bubble popped and they told the government that the risk belonged to the taxpayers (for some reason they still haven’t gotten around to inventing in the last 10 years).
    5. The government agreed to bail out the banks, but the lame bureaucrats wanted the paperwork. (I’m so 2000 and eight, you so 2000 and late.)
    6. The banks decided to just forge the paperwork to make the lame bureaucrats happy since no one reads paperwork anyway.
    7. The bureaucrats were happy to have all of the forged paperwork to file.
    8. The sheriff in rural Florida stopped kicking people out of houses because it didn’t make sense to put people on the street when the banks owned so many vacant houses.
    9. The people that were paying their mortgages got pissed off that other people were getting free houses.
    10. The pissed off people decided that maybe the Russian mob is more efficient than a democratic government, so they voted for Trump.

    I don’t think that’s good enough for a passing grade in history or economics, but it feels right.

    • Rayne says:

      You’re right, not good enough for a passing grade. For starters:

      2. The people didn’t care because, hey, free money

      Most individuals rely on the expertise of bankers to guide them when financing as most people aren’t bankers or have degrees in finance. If the bank told someone their income was adequate for a mortgage they went with it. I’m surprised that there weren’t lawsuits against banks because mortgagees relied on bankers’ expertise — but that would require expertise recognizing the injurious reliance.

      3. Business was so good that they gave up on keeping paperwork. …

      Far too simplistic explanation for what happened. Mortgages were documented; the disposition of titles was problematic.

      There’s more but the point that people were and are angry is taken. Why they were/are angry isn’t based in the mortgage industry and investment sector alone, though. Long stagnant wages, skyrocketing tuition, overpriced housing, bankrupting health care expenses, and little recourse at gerrymandered polls all take their toll. The one thing all of them share in common is a GOP majority in Congress unwilling to do anything about these sources of outrage apart from offering tax cuts to the 1% who don’t need them.

  12. GKJames says:

    While I get the anger at Wall Street, the anger at not prosecuting Wall Street bankers eludes me. First, it presupposes that convictions were reasonably certain, that the intricate rules would have been so clear to an ordinary jury that it would have easily seen how and where the wrong-doing had occurred. And that an army of highly qualified defense attorneys wouldn’t have translated that intricacy into reasonable doubt. If DOJ had aimed at Wall Street and missed, would it have been given credit for trying? Most likely, they’d have been accused of deliberately not trying hard enough.

    Second, Republicans (and Schumer) would have deemed them political prosecutions led by the Kenyan bent on waging social war on the essence of America, all in furtherance of his Leninism. It would have distracted the new administration from governing. That Obama looked at the odds and decided

    And, third, it suggests that prosecutions, successful or not, would have substantively changed the regulatory landscape. Sure, the easiest solution would have been to put Glass-Steagall back in place to preclude a meltdown replay. But no Republican (and Schumer) would have voted for it. So they tried Dodd-Frank, which every Democrat voted for. But when it came to the inevitable Republican-led roll-back, 10 of the 17 Democrats voting for it are up for re-election from states Trump had won; they weren’t about to go against the interests of the banks in their states.

    All to say that, while there is a superficial appeal to anger-driven politics, it rarely has the intended outcome. Even with bankers swinging from the yard-arm the march of the plutocracy would have continued. Because that’s what the public, by and large, wants. If it didn’t, it would (i) insist on a change in the way political campaigns are financed; (ii) contemplate term limits; (iii) stop seeing labor unions as a Bolshevist evil; (iv) not let itself be distracted by inane wars, both the culture and real ones; and (v) elect fewer Republicans.

    • Ed Walker says:

      1. This stuff isn’t complicated. See this post at FDL and this one for brief sketches of the cases that could have been brought. The first link includes a jury instruction. Note that both of these posts were done well before the Statute of Limitations ran. For further detail go to Shadowproof.com and search for Clayton Holdings; you’ll see posts by by the excellent Dave Dayen discussing the simple fraud committed by the bankers.

      For the rest of your first point, see the convictions of nearly 1000 bankers in the S&L frauds of the 1980s. Juries understand fraud, lying and cheating

      2. There is not a single politician who would defend the pig bankers after millions lost their life savings and their homes or their jobs. Do you remember the Keathing Five? No one defends a cheat.

      3. I’m not talking about the regulatory landscape, though you are wrong about that too. I’m saying people can accept a fair bailout, one that holds people accountable and punishes the frauds, and claws back the ill-gotten gains. The in-your-face greed of the bankers, the smug whining of Jamie Dimon, and the rest of that crew of scumbags was infuriating, and no one who lived through it will ever forget.

      And fuck off with that “anger-driven politics” shit. This is about law enforcement, and the difference between smoking weed and stealing billions.

      • GKJames says:

        I’ll do as you suggest. And may you be right that there will be robust prosecutions in the future, resulting in the accountability you’re aiming for.

  13. readerOfTeaLeaves says:

    If I had a penny for every housing developer, realtor, or mortgage banker who pontificated at local government meetings between 1995 and 2006 about ‘bottom lines’ and ‘cost effectiveness’ — in order to sabotage environmental regs — I’d have multiple millions from that source alone.  Those guys (always guys!) could not build enough subdivisions fast enough.   The greed was rapacious by 2005: greed had become normalized by at least 2006.   Too many naive electeds were bamboozled into believing that the critical focus of the American economy was creating more housing for more 30 year mortgages.

    This made sense in a world where fewer people had decent pensions, people had less money saved, and a home represented financial cushion/stability.  So the builders were speaking to people who were extremely receptive, and didn’t think about The Bigger Economic Picture or how the economy had shifted to part-timers, and lower pay.  (Liz Warren’s “The Two Income Trap” does an astonishing job of documenting these deeper economic shifts.)

    IIRC, my initial response to the Crisis was: “see, I tried to warn you greedy smart-asses”, but then I realized that me and mine were going to be on the hook for bailing out a lot of very exalted, economically ludicrous, lifestyles.  That those extravagant lifestyles were based in large part on fraud is still salt in the wound.

    IMVHO, the Financial Crisis spurred a rethink of economics that is having some fascinating political effects: including Bernie Sanders and Liz Warren.  Obama is not nearly as relevant as he should have been. Ditto Pelosi and Schumer, as well as 95% of the GOP.

    It’s been an education in my own case, as I was among those thinking that TARP would salvage things back in 2008.

    I’d visited a friend in Orange County that year.  While out on errands, we’d stopped by a homebuilder’s office, where we discovered that 90% of the staff had been laid off earlier in the day.  People were terribly traumatized, as they’d not seen it coming.  (Having been through that kind of massive layoff in tech in the late 90s, that kind of sudden upheaval almost struck me as cyclical, but I digress…)  People in that state of mind need a lot more than news of TARP, and like Peacerme, I could tell tales… probably, we all can.

    I think that a lot of bitterness, resentment, and contempt remain.  They help explain Trump’s election, but I do believe that people are looking more locally for solutions, and are increasingly distrustful of large, centralized bureaucracies.  And also, of neoliberal economic assumptions.  It’s a good time to be pounding nails into the coffin of neoliberalism, to kill that zombie once and for all.

  14. Bobster33 says:

    Remember the failure was not just at the federal level. My dearest Senator Kamala Harris was our late Attorney General. And after the crash AG harris agreed to not go after the bankers for Babs’ old senate seat. Our dumbassed AG could have prosecuted Steve Mnuchin, our current Secretary of the Treasury.

    Obama and Harris failed in the number one function of government, establish Justice. By failing to establish any level of justice for the common man, they sowed the seeds of our current state.

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