Wall Street bankers had recently issued a formal defense in response to continuing calls by the general public to arrest them and put them in jail. Their statement, as shown below in roman print, was summarily rejected by Main Street Americans, who treated it as a twisted joke.
Stung by the adverse public reaction, the bankers upped the ante by supplementing their original statement point-by-point, but this time in a more direct manner, as shown below in italics. The bankers thought doubling down would make their proclamation of innocence more persuasive. Needless to say, their arrogance and tone-deaf attitude only made matters worse. It also made it much more difficult for the government to keep angry citizens at bay.
We, the bankers of these United States, want to assure all Americans that we are devoted, heart and soul, to the interests of this great nation. Contrary to countless disparaging remarks by so-called pundits, there is absolutely no daylight between the interests of Wall Street and Main Street. One of our leaders eloquently expressed this view when he said that we do God’s work. We labor night and day to furnish the financial resources that are needed to build this country. We proudly carry on the great banking tradition of our forebears such as John Pierpont Morgan and Andrew Mellon. Without our munificence over the years, many important projects would not have been funded and, therefore, would not have been built. As President Calvin Coolidge succinctly put it, “the business of America is business.” It is Wall Street and the big banks that provide the lubricant in the form of capital that makes business work.
In case you plebes don’t get it, nothing of importance is accomplished in this nation without us. The services we render are indispensable for America’s well-being. Do not trifle with us lest the great capitalist enterprise you cherish comes crashing down around your ears.
The past few years have been difficult for all of us. It is unfortunate that some misguided individuals have sought to fix the blame on us for all the troubles that beset our economy. Our intentions have always been honorable. Is it a crime for us to wet our beaks when we provide such a valuable service? Are we not entitled to our modest salaries and bonuses? Should not the taxpayers foot the bill when circumstances conspire against us through no fault of our own?
Because our services are so vital to the national interest, we are entitled to every penny we make. If our business decisions should work against us through no fault of our own, we expect you, the taxpayer, to pick up the tab and make us whole. Without the risks we take, the economy would stagnate. The government saw the wisdom of our views and so should you. Bankers should be rewarded with outsized salaries, bonuses and perquisites for the risks we take. Like greed, bailouts are a good thing. Get used to it.
We had the foresight to ensure that our emissaries were appointed to key posts in the federal government. Paulson, Geithner, Bernanke, and Yellen are excellent examples of our wisdom in this regard. We convinced the current president as we have convinced every president before him that it is best to leave the financial affairs of our country to able professionals like ourselves. They, in turn, saw fit to appoint our recommended candidates to key positions such as Chair of the Federal Reserve and Secretary of the U.S. Treasury. A banker is nothing if not prudent in such matters. We leave nothing to chance. We are sure you would agree that our country has been well served under the auspices of our handpicked stewards.
Make no mistake. The Federal Reserve System was created one hundred years ago by bankers for the benefit of bankers. It would be insane for us not to make sure our cronies are put in charge of the Federal Reserve and the U.S. Treasury to protect our interests. As a result, every president has appointed our chosen emissaries to run these government institutions. These associates work for us, first and foremost. The welfare of the banks, particularly the big banks, is their priority and they have not failed us yet. We were rewarded for our foresight in this regard when we were bailed out in record time in 2008. Our designated advocates did their job extremely well, just as we expected. They successfully spooked congress into thinking that the world would end, if we weren’t bailed out. We couldn’t have written the script any better. Kudos to Paulson, Geithner, and Bernanke for a job well done. Well done indeed!
We value our relationship with government officials as much as we value our relationship with Main Street America. We understand that some uninformed individuals feel compelled to criticize us for all kinds of economic ills that have absolutely nothing to do with us. We are inured to such criticism. We also understand the proclivity of politicians to use us as convenient scapegoats. This is simply populist rhetoric as far as we are concerned. It is all right to let off steam as long as it does not interfere with our ability to make massive profits. We are big boys and can take the verbal abuse. What matters to us is the bottom line.
Every once in a while, some politician feels the need to spin bullshit into cotton candy and criticize us. This is particularly true at election time. We get that. Rest assured that these politicians are in the tank for us and will support us at every turn when it matters. And what matters most to us is making huge risk-free profits.
Our handling of a record number of delinquencies and foreclosures in the housing sector during the last downturn was a model of cooperation and forbearance. We reached out to the community in its time of need. We adjusted the terms of mortgages in record numbers. Yet, some ungrateful individuals vilified us for being heartless and not doing enough. To add insult to injury, the courts took us to task over minor irregularities in mortgage documentation. These technicalities prevented us from foreclosing and taking possession of property that rightfully belonged to us. Many people in default on their mortgage obligations were allowed to live their homes for two years or longer. In effect, deadbeats became squatters with the assistance of the justice system. When we finally gained access to foreclosed homes, we found many of them stripped down to the floorboards. Not only was this outrageous, it was also counterproductive because an economic recovery is not sustainable, or possible for that matter, until the huge backlog in housing inventory gets cleared.
If we lend you money, we want to get paid back on time. Period. If you stiff us or even think about stiffing us, we will come after you mercilessly. Further, we don’t appreciate it when someone or something comes between us and the money we are due.
For the record, we thought that the housing market was dangerously overheated well before the collapse in 2008. Nonetheless, we were encouraged or pressured, if you will, by the government to approve as many mortgages as possible. We dutifully complied. In order to meet strong demand, we bundled the mortgages into packages, which we sold to investors who could not get enough of them. We made sure those securities were rated triple A by our partners. We cannot help it if the housing market turned sour. It was a good run while it lasted. At least we had the good sense to protect ourselves by shorting the investments we sold to our customers. There are always two sides to a trade. We were just a little smarter as things turned out. Because the optics were so bad, we decided to pay a fine out of petty cash to settle with the government when they filed frivolous charges against us. That is simply the cost of doing business. Even though we were faultless, we decided to settle the civil lawsuit because it was best for us to move on. We let the government look tough, but we do not want it to become a habit. Next time, we will not be so charitable.
We will not hesitate to make easy money when the opportunity presents itself. If we know our clients are stupidly buying dubious securities from us, we will make certain we are on the other side of their trades. It would be silly for us not to take advantage of a sure thing, even if our own clients are the ones getting burned. It isn’t illegal. Look it up. That’s why we have never been criminally indicted for any wrongdoing in this regard. And never will be.
And then there is financial regulation. This misguided legislation almost spun out of control, but our lobbyists convinced elected officials to back off and water down the bill. We believe that less government interference is best because regulation strangles innovation. The banking industry is quite capable of policing itself, contrary to what others may believe. We know we can reach out to various regulatory agencies to convince them that we are able to conduct business without the need for oppressive oversight. One only has to look at the copious benefits that accrued to the banking industry after the onerous Glass-Steagall Act was repealed in 1999 to know that less regulation is the way to go. Unfortunately, there are certain individuals who are demanding the reinstatement of Glass-Steagall. Rest assured that this is never going to happen, if Wall Street has anything to say about it. Bank analysts who foolishly suggest that we increase our capital ratios obviously don’t understand why we are so rich.
We intend to police ourselves and will not countenance any government watchdog or regulator, whom we don’t control, to impede our ability to rake in bigtime profits. We know the banking business better than anyone on the planet and don’t appreciate some outside agency telling us what we can or cannot do. We understand the need to placate the pain-in-the-ass public for sake of appearances by having some putative regulatory body oversee the banking establishment. That’s alright as long as it doesn’t interfere with our business practices. No one tells us what to do, if we don’t approve it beforehand. Moreover, it is sheer folly for some ambitious bank analysts to question the financial integrity of our banks when our incredible wealth speaks for itself, underscoring our success. If it ain’t broke, we don’t intend to fix it.
Note: Part 2 of the bankers’ proclamation will follow later in a separate post.