The Big Picture quotes an article on Bill Clinton.
Then there are the derivatives. There, Clinton pleads guilty. Alan Greenspan, the Federal Reserve chairman, opposed regulation of derivatives as they came to the fore in the 1990s, and Clinton agreed. “They argued that nobody’s going to buy these derivatives, we’ll do it without transparency, they’ll get the information they need,” he recalled. “And it turned out to be just wrong; it just wasn’t true.” He said others share blame, including credit-rating agencies that underestimated the risk. But he accepts responsibility as well.
McArdle keeps saying that one man can't ruin the system, but if one man doesn't believe in safeguards for ideological reasons, he can sure help a lot of other people ruin the system. How long can people deny reality? Forever, I guess.
Case in point: one Mr. John Dugan.
Given the role that big banks played in bringing on the financial crisis
and global recession, and the trillions of taxpayer dollars mobilized to prevent
their collapse, there haven't been many people outside these beleaguered
institutions willing to speak up for them.
Until now. For it seems the too-big-to-fail crowd has found an unapologetic
advocate in John Dugan, the comptroller of the currency and the very regulator
whose job it was to prevent the banks from getting into this much trouble in the
"Our message is not to cut back on commercial real estate loans," Dugan
assured the New York Bankers Association in April 2006. "Instead it is this: You
can have concentrations in commercial real estate loans, but only if you have
the risk management and capital you need to address the increased risk."
This is the exactly the kind of regulatory mumbo-jumbo that got us into
this mess. Instead of setting strict limits and standards for bank behavior --
and enforcing them, if necessary, with public cease-and-desist orders --
regulators bought into the fantasy that there was no amount of risk that
couldn't be dealt with simply by having more capital or better "risk
management." Only later did they learn that no amount of capital, no hedging
strategy and no risk manager could withstand the collapse that was brought on by
the orgy of risky activity going on right under their noses.
Even today, Dugan remains in denial about his agency's role in the
financial debacle. He was skeptical about the bank stress tests and disclosure
of the results. He continues to celebrate the fact that national banks have had
fewer failures than banks regulated by other agencies, as if Citigroup and
Wachovia and Bank of America are somehow great success stories. And he seems to
have forgotten that, even after the crisis hit, he continued to push for
international rules that would allow big banks to hold less capital and take on
Given this history, there's no mystery why John Dugan is still running
interference for big banks he is supposed to regulate. The mystery is why he is
still comptroller of the currency.
It amazes me at this late date that people like McArdle want to play Renfield to the banks' Count Dracula, but some people aren't happy unless they worship power and authority and debase themselves propping up the blood-sucking leeches.
*h/t to Anonymous in the FMM comments.