Doug Thompson

A dad looks at Wall Street
By Doug Thompson

I love my kids and spoil them terribly. If they ever ask me for a $700 billion dollar loan, though, they’d better say “please.”
The first thing that bothers me about the bailout was that it won’t stop a recession. Therefore we’re entering a recession and picking up payments for a bailout at the same time. I know the bailout should make the recession shorter and less severe. That’s cold comfort, though.
A close second on my list of disappointments is that I’d heard this sort of thing before: Strident demands from people who both caused their own problems and railed against my “ignorance.”
“You don’t understand how important this is. If you did, you’d pay now.” I’ve heard that one before. I’m a dad.
Prepare yourself for a shock, bailout backers. I understand. For instance, U.S. car sales sank more than a third from the same time last year. The credit crisis caused that drop. In capitalist Warren Buffet’s pithy phrase, the fear of lending money is “sucking the blood” out of the economy. This severely affects big car companies on one end, people who need a new car to get to work on the other and everybody in between.
I’m quite aware of my self-interest, thank you.
Instead of assuming I’m an idiot because I didn’t instantly hand over the money, let’s take a look at why this vitally needed bailout bill didn’t pass the first time.
As I wrote in this space right before the first vote flopped, you don’t “just push a brown paper bag at the taxpayer and tell him the economy’s going to blow up if he doesn’t fill it. He may just look at you and say, ‘Let it blow.’”
This isn’t the stubbornness or self-destructiveness of ignorance. This is a rather minimal display of self-respect.
Wall Street’s acceptance of some blame would help. Some of the best creative writing I’ve seen lately comes from the street’s defenders who claim this is the government’s entire fault.
Bill Clinton signed the Gramm-Leach-Bliley Act in 1999. That opened the barn door between investment bank and the home mortgage market. Democrats wanted risky subprime home loans extended to people on the financial margins. The second Bush administration slept at the switch. There was a good column in Bloomberg Business News about how Fannie Mae and Freddie Mac enabled the danger to grow, too.
Government opened the window and left it open. There’s no dispute about that.
Nobody forced Wall Street through that window and pushed it off the ledge, however. It went on its own. It was supposed to know better.
“Everybody else was doing it.” I’ve heard that one before too. If everybody else jumped off a cliff, would you? Oh yeah. I forgot, Wall Street. You did.
I understand the pressures investment bankers faced over the years. If the portfolio managed by Banker A gave an 8 percent return in a year, somebody else bragged about getting 10. The first banker didn’t want to lose customers, so he started doing risky things too. Then Banker A made 12 percent, but the other guy did riskier things that made him 14 percent.
As long as the housing bubble didn’t pop, this game of chicken went on. I understand this, but don’t excuse it. If there’s a way to stop this pattern without more government rules and regulation, I’d love to hear it.
You broke your promise to me, Wall Street. You promised if I gave you and your customers enough tax breaks and freedom, you would repay me with prosperity.
Now you come to me in my straitened circumstances, demanding that I pay your bad debts. You resent that I do not do it with a glad heart and ready hand.
“Bonasera, Bonasera; What have I ever done to make you treat me so disrespectfully?”
Friendship is offered. The businessman’s request is granted. Don Corleone goes on: “Some day — and that day may never come — I’ll call upon you to do a service for me. But until that day accept this justice as a gift on my daughter’s wedding day.”
Dads: We’re so sentimental.