America’s bankers lack backbone.
Maybe I’m being unfair to the current crop of bankers. After all, the problem has always existed. It’s just that it has come to a head recently because we have a political power structure in place that clearly plans to take advantage of that perceived weakness. As a rule, financial types are not exactly noted for their bravery. And we all know that predators tend to attack where they see weakness — particularly if they anticipate some gain for themselves.
So it was recently when we saw a Democratic president of the United States suggesting that his administration was the only thing standing between the bankers and the pitchforks.
To anyone who has been watching the events unfolding recently and understands the causes of those happenings, the statement of the president was absurd on its face. The issue, of course, is that most people today really don’t have much of a grasp of economics. Thus, any Democratic Party propaganda offered to explain away Democratic/big government culpability in the current financial mess will have far more credibility than it would with people who do understand economics. Most Americans might say, “Well, I don’t know this stuff, but he must — it sounds reasonable.” So along comes President Obama trying to push the image of the bankers being the problem. And of course his supporters, who know little to nothing about economic matters, nod in unison like so many bobblehead dolls glued to the dashboard.
But it’s not true.
Very seldom do economic crises occur without government being at or near the root of the problem. So it is with this crisis.
This is not a failure of regulation of any kind, particularly of banking. Nor is it a failure of free markets. Rather, it’s a failure of over-regulation and a lack of free markets. In short, it’s a failure of government. Governmental interference in the market requiried bankers, for example, to make loans to people who couldn’t afford them. Fannie Mae and Freddie Mac — government-created entities — helped to create this artificial boom, and government also caused the bust by way of serious mismanagement.
The scheme got Democrats lots of votes and created a lot of very rich Democratic cronies (including players within the current administration), but eventually all fell apart because the people who benefited in the short term from these government-imposed loan deals couldn’t pay their mortgages. Of course, the people who passed the law forcing the banks to make those loans don’t pay for it; you and I do. And the banks, which were simply following the law, get the blame for the government-mandated mess.
Obama’s efforts at solving the financial crisis are less than successful because you can’t use government to solve a problem created by government. The president would like us to forget this fact because to admit it would mean he would have to confess that government was the problem. That is something a big government Democrat will never do.
Such an admission would also force the Democrats into the uncomfortable position of admitting there was a logical business reason for some folks not getting home loans — a reason that had nothing to do with the rich, racism, or any of the other Democratic Party codewords. Since those same people who got loans they couldn’t afford are among the Democratic Party’s core group of voters, that’s not going to happen.
Clearly, it is in the political interests of the Democrats to make us forget it was government, and not the bankers or anyone else, who created this problem. This effort would doubtless be aided by the perception on the part of the voters that Obama’s not the problem but the solution, which was part of the president’s message in that “pitchfork” line.
It sure doesn’t help that we have so few true fiscal conservatives and free-market thinkers in government right now. If we had more of them (and people of courage to boot), we could see honest discussions of the problems and the solutions. We’d actually see people in government propose the unusual idea that government is the problem and thus can’t be the solution. Then again, given the Democrats’ hold on all three branches of government, one can hardly expect such miracles to occur within those marble halls.
But imagine what would have happened if one or more of the bankers in that meeting with Mr. Obama had had the courage to stand up and remind him of of the facts:
“No, Mr. President. The only thing between the Democrats and the pitchforks is us, the bankers, and that’s the way it always has been. You Democrats used us to buy votes with home loans, requiring us to lend money to people who could not pay it back. You left us holding the bag, Mr. President — you and the rest of the Democrats then in Congress. And you need our cooperation to save your political hide from the people with the pitchforks.”
One can only conclude we’d all be in better shape (both from a financial standpoint as well as from the standpoint of freedom) if the bankers showed that kind of mettle. Trouble is, I fear, such courage is not in them.