They participated in reckless casino capitalism for years ever since Phil Gramm was successful in his quest to deregualate Wall Street. One of the biggest deregulation mistakes is when the Glass-Steagall Act was repealed. This act separated traditional banks from investment banks. And finally, according to Nader, the most important thing of all should be done in this situation: "Cap executive compensation and stop giving the Wall Street gamblers golden parachutes. The CEOs who have created the financial disaster should not be allowed to leave with millions in hand when so many pensioners and small shareholders are seeing their investments evaporate. The taxpayers are bailing out Wall Street so that the financial system continues to function, not to further enrich the CEOs and executives who created this mess."
For more information, here is the complete article if you really want to know exactly how we got in this mess. It’s definitely worth a read. And it explains the greed…
http://www.nader.org/index.php?/archives/2062-Congressional-Backbone-Needed.html
I agree with you and with Nader as far as that goes. But there’s another way to look at it.
Corporations exist for the single goal of making profit, return on investment. Corporations have no conscience, a conscience would be counterproductive. Just as predatory animals don’t have misgivings about the prey they kill. Top execs have only one job and that is to maximize profits.
Keeping corporations under control, maintaining good business practices, fair market practices, good competitive environment, etc. etc. is not the job of corporations, it is the job of government. Capitalism can simply not function (for long) without regulation. We could argue about specifics, and we would agree that too much is as bad as too little, but the proper balance of regulation must be achieved.
So there is enough blame here to spread around. I do think banking execs took advantage of the situation. I do think it’s a good idea to cap executive salary–sort of a ‘maximum wage’. But the primary blame her goes to the Republicans who, since Reagan, swore that ALL government regulation is bad, because government is evil and doesn’t work, government is the problem, not the solution.
In the last few decades we have had THREE major financial debacles. All caused by Republican de-regulation. And all (not coincidentally) resulting in further concentration of wealth in the US, more consolidation and ‘cartelization’ (if that’s a word) in the banking industry, bigger salaries for execs, and more economic freedom for banks.
December 9th, 2009 at 12:34 pm
One of the biggest reasons for this fiasco is stupid people – that includes everyone involved – the CEO’s, the people making the decisions in the lending institutions, and, of course, the idiots who took out the loans. I’m going to be paying taxes for the next 50 years, paying interest on the money that the government is going to borrow to help keep these people from defaulting on loans that:
(a) should never have been offered to them; and
(b) should never have been taken.
Oh yeah? And they damn well ought to have been paid. Instead, the "taxpayers of the United States" (aka – you and me), will be paying for them instead. Can you tell I’m not happy?
References :
December 9th, 2009 at 1:03 pm
I agree with you and with Nader as far as that goes. But there’s another way to look at it.
Corporations exist for the single goal of making profit, return on investment. Corporations have no conscience, a conscience would be counterproductive. Just as predatory animals don’t have misgivings about the prey they kill. Top execs have only one job and that is to maximize profits.
Keeping corporations under control, maintaining good business practices, fair market practices, good competitive environment, etc. etc. is not the job of corporations, it is the job of government. Capitalism can simply not function (for long) without regulation. We could argue about specifics, and we would agree that too much is as bad as too little, but the proper balance of regulation must be achieved.
So there is enough blame here to spread around. I do think banking execs took advantage of the situation. I do think it’s a good idea to cap executive salary–sort of a ‘maximum wage’. But the primary blame her goes to the Republicans who, since Reagan, swore that ALL government regulation is bad, because government is evil and doesn’t work, government is the problem, not the solution.
In the last few decades we have had THREE major financial debacles. All caused by Republican de-regulation. And all (not coincidentally) resulting in further concentration of wealth in the US, more consolidation and ‘cartelization’ (if that’s a word) in the banking industry, bigger salaries for execs, and more economic freedom for banks.
References :
December 9th, 2009 at 1:09 pm
I have no problem with punishing them, but it is more important to me to fix the mess we are in now, and doing the best we can to see that it does not happen again. Although much of the blame can be placed on wall street for facilitating unwise behavior and tangling the markets, the people who bought homes at inflated prices also showed bad judgment, and the people who sold them also made excessive profits. This mess has millions or participants, and most of them do not even realize that they are part of the problem, or if they do, want to blame other for not stopping them from doing something dumb. Every body who has a mortgage greater than the market value of their house is part of the problem by increasing the risks in the financial markets even if they are are making their mortgage on time because they are holding a unsecured/personal loan at interest rates that are only offed when Loans are guaranteed by assets. and for a far grater amount than they would qualify for.
References :
December 9th, 2009 at 1:49 pm
Because if you deny these CEO’s their "golden parachute", they will quit their jobs, and take with them all of their experience. To fill the void, a lot of inexperienced "noobs", if you will, will take the CEO position with no idea how to properly manage the business.
References :