Banking and Greed

Andrew Sullivan ruminates on bankers and greed:

From the time I was in college, every person who really wanted to become rich - and I mean rich - went into investment banking. In the 1980s, this was the apex of career goals. No one I knew quite understood how these bankers went on to make exponentially more dough than anyone else could, but most of us didn't much care. The idea of working with all those money-grubbers when I could eke out a living writing or reading or acting and speaking seemed horrifying to me. And I didn't envy their money, and still don't.

After all, the amounts they get become meaningless after a while. A human being can only consume so much before it becomes absurd or soul-destroying. Their vast and disproportionate wealth I thought of as a hideous prison for them....

Now I realize, of course, that their own moral wasteland became so vast that it threatened to eclipse all those struggling to make an honest living. And that changes the equation, doesn't it?

The theories of self-regulating markets that guaranteed no collapse turned out to be profoundly flawed - as most intelligent conservatives (Posner, Bartlett, et al.) have now observed. And the oh-so-clever mechanisms the bankers invented to give themselves more and more and more turned out - surprise! - to be mathematically flawed. And those of us who'd saved for retirement, paid our mortgages punctiliously, paid our taxes without armies of accountants to squeeze every last drop from Uncle Sam, and worked to build real things ... we became their victims....

I have no doubt there are many good men and women working in the banking sector. But the system is so corroded with vice, with selfishness, and, most importantly, with contempt for the common good, it needs real reform. I like what Obama has proposed and what the chairman of the Bank of England is now endorsing. I think the bailouts were necessary, just as I think the stimulus was necessary. But passing the toughest financial regulation bill we can at this point seems to me to be an urgent priority. The diffuse anger out there is a function of this deep sense of injustice - and it's correct.

We need to make banking not just boring but as profitable as any other sector in the economy: no more and no less. We need to remove the mystique that led us to this morass. And we need to do it to rescue capitalism itself from its own hubris and naive belief that economics can operate in a vacuum without virtue.

Here's my problem with what Andrew just said.  He's right of course, the investment banking system is loaded with vice and selfishness.  But so is every other part of the economy.  That's human nature, as I'm sure he would agree.

The real issue with banking is not vice or selfishness.  It is the fact that, as Senator Durban put it, 'the banks own this town.'  They have become so dominant in Washington, with their influence peddling and lobbying that they are no longer regulated in the way they used to be.  Hence, they are able to corrupt the law, and the political and regulatory structure, in such a way as to keep themselves on the gravy train in good times and bad.

Furthermore, what Obama has proposed is not anywhere near what is needed to turn this around.  And either Sullivan knows that and won't say it because he supports Obama, or doesn't know it and is talking nonsense, because of his economic ignorance.  I think it's the latter, (giving him the benefit of the doubt as to his honesty and integrity).