|
| Everybody screwed up |
| Rob Cox / Sep 16, 2009, 00:33 IST |
|
Obama's moral suasion: Quite rightly, President Barack Obama hasn’t shied away from chastising Wall Street’s bad behaviour during the credit boom and subsequent bust. So, on the first anniversary of the collapse of Lehman Brothers, it is somewhat surprising to see the president spread the blame far beyond downtown Manhattan by citing a “collective failure of responsibility”.
That’s partly politics, of course. The president faces much larger political battles than the ones brewing around his proposed reshaping of the financial system. Republicans are digging in against healthcare reform. And members of his own party are piling up sandbags in opposition to a military build-up in Afghanistan.
What’s more, with the financial industry largely back on its own two feet and the likes of Goldman Sachs turning in regular $100m-plus days, the momentum to reform the banking system has waned. So the president's Lehman anniversary speech was probably, in reality, more an attempt at moral suasion than a preview of tough legislation.
Politics aside, though, the president is right to cast the net of blame wider than the isle of Manhattan and a few rogue mortgage brokers in Southern California. As the president himself said, “it was a failure of responsibility that led homebuyers and derivatives traders alike to take reckless risks they couldn’t afford”.
The damage wrought by one over-extended homeowner and a reckless executive on the derivatives desk at AIG Financial Products can hardly be compared, but the point is valid. For the bubble to inflate before it burst, something akin to a collective euphoria must have taken hold.
Only with acceptance of the collective failure is it possible for effective reform to take place. Legislators should move ahead with the administration’s mostly sensible proposals. Perhaps just as importantly, though, is for everyone involved to recognise the next bubble. Alongside hopefully better rules, that will help avoid — or at least delay — a repeat.
|
|
|
|
|
|
|
|
|
|
 Read Business news in |  |
|
|
|
|
|
|
Advertisements |
|
|
|
|
|
|
|
|
|
|
Content Guide
