Atlas Shrugged: The Mocking

Friday, May 29, 2009

"I Want To Believe"

Megan McArdle vlogs with Glen Reynolds and some woman from the Heritage Foundation while on vacation in North Carolina.* (Wasn't she telling us that she had to cut back on spending a little while ago? Oh, never mind, that's her business.) UnFortunately there is a technical problem, and all we hear from McArdle is that Medicare has problems so National Health won't work, and the government should reduce spending. We know McArdle knows that austerity is how the depression of the '30s became the Depression and we are the only advanced Western nation without National Health, but never mind that as well.

The Big Picture quotes an article on Bill Clinton.

Then there are the derivatives. There, Clinton pleads guilty. Alan Greenspan, the Federal Reserve chairman, opposed regulation of derivatives as they came to the fore in the 1990s, and Clinton agreed. “They argued that nobody’s going to buy these derivatives, we’ll do it without transparency, they’ll get the information they need,” he recalled. “And it turned out to be just wrong; it just wasn’t true.” He said others share blame, including credit-rating agencies that underestimated the risk. But he accepts responsibility as well.

McArdle keeps saying that one man can't ruin the system, but if one man doesn't believe in safeguards for ideological reasons, he can sure help a lot of other people ruin the system. How long can people deny reality? Forever, I guess.

Case in point: one Mr. John Dugan.

Given the role that big banks played in bringing on the financial crisis
and global recession, and the trillions of taxpayer dollars mobilized to prevent
their collapse, there haven't been many people outside these beleaguered
institutions willing to speak up for them.

Until now. For it seems the too-big-to-fail crowd has found an unapologetic
advocate in John Dugan, the comptroller of the currency and the very regulator
whose job it was to prevent the banks from getting into this much trouble in the
first place.


"Our message is not to cut back on commercial real estate loans," Dugan
assured the New York Bankers Association in April 2006. "Instead it is this: You
can have concentrations in commercial real estate loans, but only if you have
the risk management and capital you need to address the increased risk."

This is the exactly the kind of regulatory mumbo-jumbo that got us into
this mess. Instead of setting strict limits and standards for bank behavior --
and enforcing them, if necessary, with public cease-and-desist orders --
regulators bought into the fantasy that there was no amount of risk that
couldn't be dealt with simply by having more capital or better "risk
management." Only later did they learn that no amount of capital, no hedging
strategy and no risk manager could withstand the collapse that was brought on by
the orgy of risky activity going on right under their noses.

Even today, Dugan remains in denial about his agency's role in the
financial debacle. He was skeptical about the bank stress tests and disclosure
of the results. He continues to celebrate the fact that national banks have had
fewer failures than banks regulated by other agencies, as if Citigroup and
Wachovia and Bank of America are somehow great success stories. And he seems to
have forgotten that, even after the crisis hit, he continued to push for
international rules that would allow big banks to hold less capital and take on
more leverage.

Given this history, there's no mystery why John Dugan is still running
interference for big banks he is supposed to regulate. The mystery is why he is
still comptroller of the currency.

It amazes me at this late date that people like McArdle want to play Renfield to the banks' Count Dracula, but some people aren't happy unless they worship power and authority and debase themselves propping up the blood-sucking leeches.

*h/t to Anonymous in the FMM comments.


clever pseudonym said...

I enjoy those Pajamas Media vlogs. They bring back happy memories of playing with my Easy Bake oven while pretending to be grown up. They're so low-rent and the way everyone takes themselves so serious is hilarious.

Once again, Megan appears in front of a camera looking like she just rolled out of bed. Actually, she almost looked like she was IN bed.

Susan of Texas said...

Yes, it looked like a condo or hotel bedroom. Since she's sharing the unit I can understand going into the bedroom, but lying on the bed was not the best choice.

Heh, it's pretty funny to see these bloggers act as if they are a serious operation, instead of a bunch of people one or two degrees away from playing on their home-made Starship Enterprise bridge in the garage.

ChicagoEd said...

I like how Instashit talks about some article saying that the U.S. has $90 trillion of "unfunded mandates" and admits that the article didn't really explain very well how they came up with that particular number, so he's not sure if it's accurate. But then he goes on to ask Megan what to do about the $90 trillion deficit. Let's just say we're $90 trillion short. Is Megan the person to ask for solutions? Then Megan's DSL goes all screwy (probably because Yglesias is downloading porn). One good thing is that Megan doesn't really appear to be "manifestly" hung over, like last time. (Remember Ladybughead?) Doesn't it piss you off that everyone thinks Megan's an undergraduate still? Megan's in her mid thirties. In a normal world, beer keg jokes just wouldn't be that funny anymore. But in Meganworld every thing's funny all the time--as long as it involves Megan.