Should we punish stupid bankers by plunging the entire country into recession? Most of the stupidest ones have already been punished; as I understand it, Dick Fuld lost about $100 million in the Lehman collapse, while the head of Bear lost $1 billion. The mortgage bankers have already been fired. We’re sending a message to a largely empty room.
But even if there were some people there to send that message to, it wouldn’t be a good idea. The people protesting and flooding their representatives with phone calls almost certainly do not grasp what a financial collapse implies. But policymakers should.
Steven Perlstein at the Washington Post:
Now let me tell you something very simple and very important: You can try to prevent a financial meltdown or you can teach Wall Street a lesson, but you can’t do both at the same time.
So which will it be?
The Credit Crunch: Loans Out of Reach:
Simply put, the meltdown on Wall Street has made it tough for many Americans to get a loan to buy a home, purchase a car, start a business or even send a kid to college.
And with all the talk of a credit crunch — some are even calling it a credit freeze — it may get even tougher.
[G]iven just how badly the Great Depression sucked, I’m willing to gamble on stopping it, even if that gamble fails, even if it is not necessary (a question that, if we actually go through with it, will be much argued and never answered). I’m not willing to gamble for the bankers; the worst thing that will happen to them is that they retire on a pittance, or take a boring job somewhere. I’m worried about the 40 million or so people who might end up out of work, and with nowhere to go. I’m willing to do quite a bit to stop that from happening, even let the bankers off scott free. I don’t think it’s actually necessary to do that, but if I have to choose between helping the 40 million, or expressing my moral outrage–well, there’s always skywriting.
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