It’s amusing the way politicians veer between feigned outrage at financial services mischief and open fawning for the same mischievous financial institutions.
In 1999 when Bill Clinton demanded ‘homeownership for all!’ Wall St. lobbyists schmoozed Democratic and Republican legislators, the Glass-Steagall Act was canceled and Genie, let loose from the bottle:
‘No Doc, Lo Doc, 100% financing, Liar Loans…’ unleashed a tsunami of rickety mortgages, violent housing market gyrations, and ultimately, catastrophe.
10% unemployment, institutional collapse (Bear Stearns, Lehman…) trillions in equity lost, families, shattered.
Rushing to the podium, politicians wailed their disbelief at ‘Predatory Lending!’
But obviously, the above products (‘no-down-payment,’ any credit score will do….) were exactly what was required to provide ‘home ownership for all.’ (meaning: ‘all’ who previously didn’t qualify) and were exactly what politicians had asked for in the first place.
Needless to say, all was soon forgiven come election time, when in 2008, Barack Obama took $44m from financial sector firms. (a new campaign finance record) Funny, they never call them predatory politicians.
But soon the hand wringing resumed and our elected leaders came looking for justice in the form of fines:
Bank of America: $16B!
RBS $1.1B!
Deutsche Bank $16B!
Not to mention HSBC, Barclay’s Bank…in all more than $200B in fines have been extracted from financial misbehavers in the last 8 years. Go ye forth and sin no more!
But just to show there were no hard feelings, Goldman Sachs (certainly a substantial player in the subprime mortgage stew) magnanimously agreed recently to pay Hillary Clinton $675,000 for three speeches she gave. (maybe she was lecturing them on ethics?)
This week, markets were rocked when Deutsche Bank, one of the world’s largest, staggered dangerously.
The Euro titan, it’s stock trading at a tenth of the previous high, teetered on the brink!
But then, an ironic hero swept in on Friday, when the U.S. Justice Department suggested it might be willing to waive 66% of Deutsche’s above $16B fine in an effort to help bail them out…
It’s nice when old friends forgive and forget.