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Lynch the Bankers

April 19th, 2010 by Mike N · 3 Comments · Uncategorized

On 4/15 I received an email from my Michigan Senator Carl Levin announcing that hearings on the banking crisis had just started. Sen Levin is the chair of the Senate Permanent Subcommittee on Investigations. Naturally, the financial industry is presumed guilty and must now prove their innocence or somehow explain away their evil behavior. First he sets the stage for the lynching by identifying the problem as he sees it and the evil behavior that caused it:

“I thought you might be interested to know that, on Tuesday morning, the Senate Permanent Subcommittee on Investigations, which I chair, held the first in a series of four hearings aimed at unraveling the causes and consequences of the recent financial crisis.

The crisis was not an act of nature; it was a man-made economic assault that cost millions of jobs, evaporated billions of dollars in retirement savings and put our nation in the worst economic tailspin since the Great Depression.

Extreme greed was the driving force of the crisis. And, it will happen again unless we change the rules.”

He goes on to give a case in point:

“Our hearings are based on a year-long bipartisan investigation conducted by the Subcommittee. The first hearing focused on the role of high risk loans, using Washington Mutual Bank as a case history. It showed how the bank originated and sold hundreds of billions of dollars in high risk loans to Wall Street in return for big fees, dumping toxic mortgages into the U.S. financial system like polluters dumping poison in a river.”

So there it is. The selfishness and greed of men (read self interest) is the cause of all the financial maladies in the world. The question of why the bank, after decades of good sound management, would suddenly risk its existence on high risk securities is a question Mr. Levin won’t ask or answer because the answer is: the government made it profitable to do so with its market encouragement of low interest financing for house buying.

But it isn’t just the greed of man, it’s the greed of a particular class of men, the moneylenders and merchants, the men of the marketplace. Demonization of these men has been going on for thousands of years. In a book titled “Forty Centuries of Wage and Price Controls, How not to fight inflation” by Robert Schuettinger and Eamonn Butler, Caroline House, the authors write at length about this hatred for businessmen. Reporting on ancient Greece they write about a politician named Lysias:

“But Lysias was not the first and he was hardly the last politician to court popularity by promising the people lower prices in times of scarcity if only they would put an occasional merchant to the sword. The Athenian government, in fact, went so far as to execute its own inspectors when their price-enforcing zeal flagged.” (page 16)

Will Sen Levin look at his regulators with an eye towards punishment?

“The next three hearings will look at the role of regulators, credit
rating agencies, and investment banks in contributing to the financial
crisis. The Subcommittee will present additional case histories to examine
each stage of the assault.

The goals of the hearings are threefold: to construct a public
record of the facts to deepen public understanding of what happened and to
hold some of the perpetrators accountable; to inform the current
legislative debate about the need for financial reform; and to provide a
foundation for building better defenses to protect Main Street from the
excesses of Wall Street.”

The regulators will no doubt complain that they need more dictatorial power over the market and Levin will hasten to give it to them. The main purpose is to further indoctrinate the masses on the evil of businessmen.

The problem as I see it is that the masses have been falling for this money-men-are-evil nonsense for thousands of years and are still falling for it today. Sen. Carl Levin is one of today’s Lysiases. Fortunately there are people today who are questioning the Levins and who are beginning to question government interference into the economy. Many of the people I talk to at Tea Parties seem to agree that the financial meltdown was a failure of a regulated market and not a free one. I don’t know if America can last long enough for their numbers to grow into an influential force. Though the fight may yet get rough and take too long, I am optimistic. As long as we can hang onto free speech there is hope.

Mr. Levin links to his opening statement hereThe obfuscations and evasions are many.

(The Above mentioned book seems to be out of print. I visited a few rare book sites but no luck. It was printed in 1979)

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