When you cut through the technical details and the marketing distractions, sorting out the US banking fiasco comes down to one, and only one, question. How tough are you willing to be on the people who control the country’s large banks?
One option is to be gentle with them and adopt only ideas that they pre-approve. This route involves complicated schemes to purchase, lend against, or otherwise “wash” toxic assets out of the banks using taxpayer subsidies. This will be expensive (for the taxpayer), messy politically, and – most likely – will not work, in the sense of restoring the banking system to something close to its normal mode of functioning; check with Hank Paulson for details.
Alternatively, you can be tough and take steps towards really assessing which banks are insolvent when you use market prices to value their assets. These banks can be taken over in a scaled-up FDIC-type procedure (no golden parachutes!), and controlling stakes in fully recapitalized banks can be sold off immediately to new private owners. The new private owners can handle, under proper anti-trust supervision, the break up the banks. This approach will be cheaper for the taxpayer (but nothing is free at this stage), easier to explain to the electorate and their representatives, and it will work – this is in fact the standard prescription because it always works. But it will not make powerful bankers happy.
So which way is the Obama Administration heading? We honestly don’t yet know; the signals are mixed.
Indications that we are rolling over for the banker lobby are: (1) weak executive compensation caps, announced last week, and (2) insufficient money available or yet sought to back up the recapitalization that should follow the “once and for all” stress test of the banking system. The math on point (2) is: there is only $320bn left from TARP, of which – we learned today – $100bn is to go in further support for the securitized credit market, $50bn for housing support (and this could end up higher), and at least $50bn for private-public toxic asset purchase/loan scheme (thi is my inference from the statement that this bank should be $500bn going on $1trn total). The $120bn or so left over is probably not enough to recapitalize one major troubled bank, let alone the entire system.
But there are also more positive signs. Secretary Geithner was much more critical of bankers and their compensation schemes than officials have been to date. And President Obama is clearly angered by bankers’ arrogant bonuses. The Administration’s messages of transparency and accountability are refreshing and exactly on the mark. And I liked this line from Geithner (from CNNMoney),
“These banks need to understand that access to government resources is a privilege, not a right. It’s not for the banks. It’s for the people, and companies depend on that.”
Do the banks understand this? Read Lloyd Bankfein’s article in Monday’s Financial Times, and tell me if you see any such indication from the CEO of Goldman Sachs.
So how do you get the message across? Obviously, we need the comprehensive stress test immediately and it has to be transparent and very tough. And this is where David Axelrod and Rahm Emanuel have apparently been exactly right in the past 10 days. According to press reports (NYT yesterday and WSJ last week), both have pushed for tougher symbolic and substantive actions that would hurt bankers’ pocketbooks and weaken the largest banks.
Remember, weakening the big banks and their bosses should not be seen as an unfortunate side effect of beneficial medicine. It is exactly what we need to do under these circumstances. Unless and until these banks’ economic and political influence declines, we are stuck with too many people who know exactly what they can get away with because their organizations are “too big to fail.”
And weakening these banks (or actually having some of them go out of business and be broken up) as part of a comprehensive system reboot – with asset revaluations at market prices and a complete recapitalization program – will help return the credit system to normal.
For reasons that are not obvious, Axelrod and Emanuel have not prevailed on the degree of toughness towards the American Banking Oligarchy. But this may change. Let us hope it is soon.
The Baseline Scenario 
We need to see clawbacks, all the way down the organizations. Not because it will do us any good financially: the amount we’d actually get back is a pittance compared to what we are on the hook for. No, we need clawbacks to slap the bankers across the face in the only language they understand: money.
Cheers,
Carson
Bravo! This is about the best analysis I’ve seen on the Geithner “plan”.
Generally comments are negative because everyone was hoping for some quick and dirty plan that would favor his or her interests or preconceptions. As a bit of a socialist, I would have favored sweeping nationalization, and have been commenting in that direction for many months now.
The truth is, however, that there is no quick and dirty plan that could now be considered fair (read politically acceptable) by all concerned.
Banks have not been forthcoming about the value of their assets as Obama explained in his most recent statement. The only fair solution is to send in the National Bank Examiners to find out what the assets are really worth. Of course, this is what should have been done two or three years ago, if Greenspan had been doing his job.
Unfortunately this will take time, which is why Geithner’s plan is vague.
Let’s hope they will be real tough with their stress test.
A question has been bothering me for some time and I have not seen good explation or information around this. Lets stipulate that most of the banks (90%) have toxic assets on their balance sheets with varying sizes. Lets assume that this prevents them from lending the additional Fed money that they are getting.
Question: Why isn’t the Fed or some private investor starting new banks. Why aren’t new banks with well capitalized balance sheets propping up all over. Theoretically, these banks would be fine from a balance sheet perspective and all we would have to do to get credit flowing is to supply these banks with the money. In the meantime, we would let the bad banks stew, figure out their really issues and go dead/bankrupt?
I suspect that the issue of credit flowing is not simply an issue of banks not having good balance sheets, it also is a function of the fact that the demand for credit has dissipated as consumers have pulled back and are rebuilding their own balance sheets.
But the goal of encouraging new bank creation which theoretically would be safer and sounder should be encouraged? Is their any evidence to see that this is happenning? Are banks being chartered in some corner of the world that we don’t know off and will become the new Citibank? Seems like a great business opportunity to me…
Re DP’s point, see “Let’s Start Brand New Banks” at http://online.wsj.com/article/SB123388681675555343.html
Simon Johnson asked about Geithner “Can this person, your new economic strategist, really break with the vested elites that got you into this much trouble?”
And though all of us would agree with Simon Johnson’s call for a crusade to “splitting … powerful interest group into competing factions, and taking them on one by one” I am sure that among the “powerful interest” besides some banks it also behooves us to include the regulators who have considered it to be their god-given right to impose their agendas on the market.
Right now the Basel Committee and some of its acolytes, responding to its absolute failure in trying to avoid a crisis by means of creating disincentives for banks to assume credit risks as measured by others, is now slowly evolving into believing they could and should measure and fight systemic risk. Their cognitive dissonance is truly scary.
Today in the hearings on the stimulus package we heard a senator asking Geithner for what bank regulations would guarantee not having the current crisis ever again, and Geithner had no answer.
The simple answer would be to send the regulatory framework back to pre-Basel II days, with all credits having the same bank capital requirements independent of their perceived risk; and take away any formal powers from the credit rating agencies and which have allowed them to market themselves as the supreme risk overseers.
[…] Update: Simon Johnson of Baselinescenario.com has responded to yesterday’s announcement; he is at least equivocally optimistic. […]
Suppose the banks are taken over, management fired, and then the banks are resold to new owners. I just wonder, who’s rich enough to buy a bank? Seems to me after all the dust has settled, the same people will still be owning banks, except they’ve been shuffled around.
The difference is the owners would have their previous equity wiped out, and would have had to fork out more money to buy the banks again. But if controlling stakes have to be immediately sold, that means all the money going into recapitalizing benefits the new owners. Who are pretty much the same bunch as the old owners.
You can have nationalization, or you can have a taxpayer-funded bailout of private investors. You can have degrees in between. But you cannot argue for something that’s “good for the taxpayer” without keeping the banks in government hands for as long as it takes the economy to recover.
Kong Jie, the answer to your dilemma is that you can if you are willing to step outside the box. After recapitalizing the insolvent banks, the government simply mails an equal number of share certificates to each taxpayer and lets them own the banks directly.
And since Team Obama is so good with websites, they can also start a corporate governance website where shareholders can have the results, resolutions etc explained in plain english, and where they can participate in general meetings online and vote, without having to show up or mail in proxy forms.
I’m not a banker, economist, or finance person. I’ve been reading this blog-site to learn more about our situation, and it’s been great for that! So, apologies if my question is naive.
Are there any “good banks” around today? It seems like creating a fleet of brand new “good banks” will be a logistical nightmare – hiring new people, buying desks, pencils, calculators, etc. Politicians will want them to rent specific buildings owned by connected donors, etc. etc.
Why not find some medium banks who have been prudent and have sound investing strategies and “nudge” business their way? Are there no sound regional banks who are just itching to make it into the big leagues? If yes, let’s give them TARP money to beef up their balance sheets.
Isn’t this the way our capitalist system is supposed to work? Big competitors flounder, smaller eager competitors take business and succeed.
The existing “bad banks” can then be sorted out by the market. Why create new “bad banks” when they exist already?
There are already organized protests starting outside the bankster’s homes. Are they going to take their medicine like good little children, or do they really want people rioting in the streets every time they walk out their doors?
I think Obama gets how close to the edge a lot of people are actually becoming. He’s the one out there talking to the homeless and McDonald’s workers at his speeches.
“For reasons that are not obvious, Axelrod and Emanuel have not prevailed on the degree of toughness towards the American Banking Oligarchy.”
Is it because they are on the political side and not economics experts like Geithner? This administration seems admirably keen on relying on expertise rather than politics in developing policy but, in this case, perhaps they would be better served by listening to someone from outside the Wall St consensus.
Why be tough on these guys? No competent bank executive will work for $.5 million a year. This is just childish grandstanding. Take them out to dinner at the nicest restaurant in town. Tell them you are seizing their banks to recapitalize them. Let them keep their salaries as long as they cooperate. Promise them that if the new owners of their bank fire them, they will get at least a week’s severance pay for every year’s service and Tim Geithner will write them a nice letter of recommendation.
Yes, well when Barney Frank today has to tell bankers to be “ungrudgingly cooperative” my eyes roll far back into my head. I think Bill S reminds us of a good point–we are rewarding failure here. And those sound medium and small sized banks are being punished because of their prudence.
I’d also like to see a suspension of all proprietary trading by any subsidized financial institution for the duration of the subsidy. Do we really want these clowns using taxpayer money to trade for their own accounts?
Hi Simon,
I have enjoyed watching CNN recently and Bernanke being quizzed by several senators who were using quotes from one Prof. S. Johnson from MIT.
Why can’t nationalization follow an FDIC pronouncement that a bank is insolvent? In bankruptcy, shareholders and most if not all of creditors lose their investment. The illiquid assets don’t need to be “bought” by taxpayers in this scenario because it flows from bankruptcy. Some money might be needed for capital, but if what’s left are good assets, the amount needed would be much less than if taxpayers are forced to subsidies a “price” someone says these illiquid securities may be worth.
The banks are not the right conduit, in this deflationary recession, to get money flowing into the economy: the government stimulus package is the right conduit.
Instead of committing taxpayers to another couple trillion dollars for insolvent bank support, commit those funds directly into the economy through stimulus investments.
At http://www.alternet.org/story/126507/, Dean Baker says:
…if we believe the credit crunch story, there’s a real simple test. There should be a huge rise in the ratio of mortgage applications to mortgage issuances, which correspond roughly to the homes sold. Well, there isn’t. There’s no perceptible rise at all….
But the fact that there’s not this imminent credit crunch does mean two things: One, we have more time. And two, we could think this through. We could structure this in a way so that we don’t just end up giving money to the shareholders who took a bet and lost. In a market economy, if you take a bet and lose, you’re out of luck. That’s the way it’s supposed to be.
So, one, we don’t want our money going to the shareholders. And two, perhaps more importantly, we don’t want it to go to the bank executives. And, we have the time to sit down and work this out to make sure that what we do doesn’t reward the people who got us here.
Simon Johnson makes a powerfully convincing argument. I trust, however, that Axelrod and Emanuel have made the same argument to the President and that he too recognizes it’s wisdom. However, as an astute politician Obama probably understands the advantage one gains when fighting a political battle in starting out by appearing conciliatory and only showing hostility and blooding noses after your enemy has responded in an evasive or hostile manner.
My guess is that Obama is in essential agreement with Johnson, Axelrod and Emanuel’ thesis — but is also a skilled politician as well.
We have a test here of Obama’s political skill and genius.
Why have a Board of Directors, if they’re not directing and, if regulation is going to have to come in and do the job ? It is clear the banking leaders need to finally be held accountable, and it must permeate the top 4 layers of leaders,per company, at least. In addition to the salaried layers, every board of directors needs to exit as well. The role of a Board is so beyond any concept of effectiveness or any alleged or implied responsibility. Reform should include a complete shift from current day or historical ‘Board’ directorships, unless there is radical change to how they are selected and held accountable. In the big scheme of things, are typical Boards not made up from the same narrow, very limited group of individuals. Like congress boiled it down to 8 bankers on the hill, there are relatively few men (fewer women) running corporate America.
From the trenches beneath the glass ceiling, this has been going on for decades frankly. Many (most) assumed it was just ‘how the industry worked’, we were free to go right ? Did we not sit back and scoff at executive pay since the beginning of time,or at least each time it was published – while minions scraped to keep up with “inflation”? It was a nice ride as it rolled in – moderate stock ‘book/paper’ returns, however like all good waves, they crash or fade – quickly. Flex Simon flex, help us turn the ship !
the bankers own the majority of the congress. as any respectable gangster will always tell you, you have to own both the coppers and the judges to get away with anything.the bankers own them all,including obama. just witness dirtbag madoff’s deal…..just saying,the dude’s a banker and a thief and there he is,at home in his million dollar digs.niiiiice.
Agree it is time to break up the “too big to fail” banks. Their current state and our economic future is both the reason and the opportunity to accomplish this. The Glass-Steagall Act should be reinacted. Remember when banks couldn’t operate across state lines and when even branch offices were strictly limited. I feel my money was safer then, when the banks were too small to operate in a world market.
A start might be for respected academic and industry economists to unite in petitioning the White House for a sensible approach that Teddy Roosevelt would endorse by enforcing the antitrust laws we have too long ignored. Remember, what our Congress has apparently forgotten, that the United States was and is a great social experiment not a capitalist venture. As Wm. O Douglas believed “small is beautiful” and less threatening to our way of life.
R Luczak makes a good point, but why not a grassroots petition as well, or a Facebook group:
No “Too-Big-to-Fail” Banks!
Watched Mr. Johnson with Bill Moyers last evening. A few days ago I posted the following comment to the article, “Big Lessons in Finance From a Little Bank You’ve Never Heard Of”, by Steven Pearlstein, at WashingtonPost.com:
“If one thinks make, mine, grow and provide services Wall Street re the economy is, I opine, as the tail wagging the dog.
It seems as though, propelled by its, call it, Wall Streetean elements, the financial industry extracts a percentage of the benefits of the economy far in excess of its concrete (I’m thinking make, etc.) contributions.
In the long run, suboptimizing the whole, notwithstanding that it’s a differentiated whole, in favour of optimizing parts or a part, is significantly destabilizing and therefore unsustainable. Internalizing this is not a matter of intelligence; it’s a matter of wisdom. The brightest are not necessarily the best.
Wisdom and intelligence are not necessarily positively correlated. Things such as greed, arrogance, entitlement and self-indulgence often work against the clear desirability of that positive correlation.”
It is crystal clear that the concept “too big to fail” facilitates the continuation of the tail wagging the dog and, accepting the premise that capitalist democracy is desirable given the available alternatives, insults the intelligence of reasonably intelligent people.
Dear Mr. Jones,
Your anti-trust idea is brilliant. I don’t why I hadn’t heard of you before the Moyers interview.
Down with the oligarchs.
Thank you, Dallas Murphy
Let the audits begin… It seems to me that we’re a little like guests at a masked ball where all the courtesans are wearing overcoats, you know it’s going to be pricy, but you’re not sure exactly what you’re going to get for your money.
Greetings, everyone…. Short-term profits, without regard to the common “good”, have been the driving force behind corporate/global capitalism for some time now; responsible, far-sighted, and ethical investing just doesn’t make sense for most these days. Machiavellian investing, emphasizing maximum profits rules. We need to re-think our values, our motivations. Wage stagnation, I believe, is a huge reason we’re in this mess right now. How can an average worker save enough to put 20% down on a house these days? They can’t. So, without any equity going in, or very little, it’s not surprising that when real estate takes a hit, things get goofy. The financial products offered these days, especially with regard to mortgages – conventional AND sub-prime – are just not responsible or smart. Reduce profits, think long-term, and invest in workers in the form of increased wages. Too good to be true? Can the average shareholder see that this makes sense for them in the long run? Just because everyone’s doing it (i.e., thinking only near-sightedly), doesn’t make it right. Maybe my take on this is ridiculous, and won’t make sense to most. I’m a free-market guy, but the outright greed these days makes me nauseous. I look forward to breaking up the oligarchs, and believe it can and will happen if we collectively make it happen by continuing the dialogue and insist on doing right for the common good….
The common response to getting tough with the bankers is that they will leave and the “brain drain” will hurt future performance. I say who cares!! The work of banks can be done by computers- take money in at 3% and loan it to qualified people at 5%. You dont need Harvard MBAs to accomplish this. Or better yet nationalize the indusrty and make them all GS12s. What is surprising to me in all of this has been the realitve lack of protest world wide and virtually no new ideas on economic thinking.
Dennis is right! Computers can certainly do most of the job.
Then we can turn these busy human intellectual giants, currently expending their brainpower amassing oversized nest eggs, to more socially useful activities such as scientific investigation, making music, or even thinking about how to improve the programs running the aforementioned computers so as to even further improve the lives of the human community.
The common response to getting tough with the bankers is that they will leave and the “brain drain” will hurt future performance. I say who cares!!
Amen. America needs more scientists, engineers and designers and fewer paper pushers of all stripes. If we had sound money, didn’t reward speculative behavior with inflation-transfers from the general populace, and didn’t massively favor mere capital gains over sustainable income in our tax regime, we’d get exactly that.
Cheers,
Carson
This is one of the more intelligent sites I have viewed on the Internet, with some pretty intelligent comments in response to the information contained herein. All thanks to Bill Moyers for putting Simon Johnson on the air and at the same time letting people like me learn about Baseline Scenario, which I didn’t know about until I saw his show.
We have a family member who is a highly competent and talented structural engineer. Down through the years he has always been absolutely furious about the high pay of bankers and wall street types who don’t “make anything real.”
Unfortunately, we can now see that they do make something real, and the name of what they make is called Chaos. Chaos for the rest of us based on arrogance and simple greed. They are too powerful. They are, in fact, oligarchs. We are beginning to see that.
I believe Simon Johnson is absolutely correct that these people have to be reined in, and soon. And I think that America’s faith in the Obama Administration is pretty much dependent on taking just this kind of hard line.
If Timothy Geithner is too closely allied with these bankers and can’t make the hard decisions necessary to get them out of the picture (and if necessary close their banks down), perhaps he should step aside.
You know, I suspect the White House reads its mail from whitehouse.gov
Shouldn’t we be doing our best to support Axelrod, Emanuel, and Obama in terms of strenthening Geithner position against the banker cronies? Drop the administration a line. It couldn’t hurt.
Obama better watch out. If he goes along with the banks and the people are as fed up as me, many more will walk and stick it to the fed.
It may very well go down in history how the first US black president caved in to the white man and sold a free country from which we may never recover. By never recover I mean future generations will never get a chance at unlimited possibilities because the rules will forever change.
Obama has to intervene on the “too big to fail” banks and show these lobbyists that America is not for sale. The new CEO’s that takeover the banks will never make these same mistakes. Let the current ones go ex pat with the money they stole and play gin rummy for the rest of their lives with Madoff’s relatives.
You have permission to forward this to whitehouse.gov
Blaming the bankers is like an addict blaming his drug dealer. Face it America, the bankers provided the drug you so desperately demanded: easy credit. And now you get to pay the bill. Blame the bankers all you want but know that the real cause and problem is you, the little people who lived beyond your means, wanting to play with the big boys.
What about fractional reserve lending? Isn’t this collapse also about that phony scheme to create artificial wealth, insured by tiny FDIC premiums and fiat money as needed? Would Professor Johnson’s suggestion on the Moyer show about an “intervention” change any of those rules???
Bill S—That was my suggestion a long time ago.
Certainly we Tier 2 banks with good fiduciary habits who could step in and be nurtured with any taxpayer money handed out. I can hardly stand the thought of any more money going to these crooks with off the book operations who got caught with hands in the cookie jar.
Like a few other admitted non experts here, I am not well versed in “Economics” so my statement could well be naive also.
As someone said we have Bad banks already, and we want to create new Bad banks, maybe this is just using the wrong terms to describe what a Bad bank and I’m barking up the wrong tree. But it seems to me that the issue here is Debt (and probably some criminal activity) and who is going to pay for it.
If the big banks own all this trash, and it looks like they do, and the government makes them eat the losses, and puts money into “new healthy banks” I wonder how the losses from the big bad banks gets distributed throughout the financial world and in the real world also. It’s really hard to understand what this means. I’ll stop here. :)
simon J’s right on target.
we can not reward all this mismanagement at the Big Banks with more cash.
Ben and Jerry probably have it right respect to the ratio of Management to production worker salaries.Why not impose it on bankers- if we had half the board seats held by production workers that might help too.
No bank should be told they are too big to go broke!Many, if not m,ost should be declared bankrupt, sold and divided up. Yes, there will be big losses, but far less than if taxpayers money is guaranteedto support their mistakes.
On another theme, why don’t we go back to Econ.101 where trade is defined as “stuff for stuff?” That is not stuff for dollars! With trade balance defined as buying only as much as we match with goods we have to sell, we can get the trade balance evened out pretty quickly. And, we can make Made in American a reality again.
Who are the American “Banking Oligarchs”?
In the interview with Mr. Moyers, the Rockefellers and Standard Oil are cited as notable examples of business controlling the political sphere. We all know the names of the big banks in today’s market, but are there analogues for Rockefeller as well? Are there people today who have as much concentrated power as Rockefeller did in the early 20th century? If so, who are they?
A fine exposition of the core financial system problems .Concentration of such power is ultimately corrupting and against the public interest .Is a Glaas Steigal legislation an answer? Could the smaller institutions compete world wide?It would be most informative to see a conceptual construct of a future banking system The title of Simom Johnson’s blog would be appreciated .His is a clear voice in this current economic wilderness.Thank you.
Mr. Johnson’s diagnosis sounds accurate, and the proposed treatment appears very effective. How about an implementation
suggestion. During Obama’s campaign, I was concerned about
how he would handle the power-money guys, not just here, but globally too. The real question to me pivots around the nature of the resistance from the players to their rapid and wholesale
displacement, which must occur to implement Mr. Johnson’s
solution. This is the analysis that deserves Mr. Johnson’s full
focus, in all its massive complexity and extremely formidable
consequences. I would appreciate hearing his views on the nature of the resistances, the strategies to combat them,
the effect on the world power-money distribution, the effect
on the regimes in China, Russia, etc., what the new power-money consortium would look like, and its new leverages and
threats differ from the previous constructions.
And lastly, please address the issue of the political feasibility
of accomplishing the change, since implementing these changes will most certainly be seen as revolutionary by the
people who actually run the whole show.
Thank You for your fine work!
Right! That’s the question: What do our top thinkers have to
say on this point? What are the vetting points? What are the possible consequences for the plausible, varied fixes?
Thank You
Thank you so much for giving us an easily “digested” explanation for this continuing, downward spiral of the economy.
Nothing I’ve heard has made any sense until I watched you on Bill Moyers Journal.
I’ve watched, over decades, the misuse of credit & spending, both personal & governmental. This crash actually took a lot longer than I expected, probably due to some clever number crunching & dishonest reporting.
I thank you for giving us the clear, honest picture & solution to this tragic, greed infested circumstance in which we find ourselves.
Timothy says it best: For THE LOVE OF MONEY IS A ROOT OF ALL EVIL: and SOME WHOSE HEARTS WERE FIXED ON IT have been turned away from the faith, and BEEN WOUNDED WITH UNNUMBERED SORROWS. (1 Timothy 6:10 BBE)
The reason Barney Frank and Chuck Schumer oppose nationalization is because of the $$ they recieve from the banking industry.
On that severance pay suggestion…. Now, wouldn’t that be one week’s severance pay per year of service after 5 years of service, and one month’s severance after 20 years? (That should hold costs down.) We could “do the numbers” — to cut severance costs while maximizing the severance perceived value, and perhaps throw in a “pre-approved” credit card application or two to take the sting out of the deal. Isn’t that the real “banker way?”
Pity. I think a transposition happened between his mouth and their ears. Likely, they heard “grudgingly uncooperative,” not “ungrudginglu cooperative.”
“Why have a Board of Directors, if they’re not directing and ….”
But they were, have been, are and will be. The directive has been “dead simple:” maximize quarterly profits preferably within the bounds of the law, and, lacking that, at least do so from a defensible position. A bank CEO who needed the Board to explain its directives,…. well, that person wouldn’t be the CEO in the first place, would they.
A series of interesting points in that posting, leads me to suggest that mortgage bankers and the rest of the industry that ‘securitized’ packages of mortgages, really were in search of a market for their products. In the true spirit of professional marketing, they ‘created their market’ and left everyone feeling like they’d been part of a win-win deal. Having created their market, the inevitable next step was to expand their market, since corporate soundness and desirability was judged by quarter-to-quarter and year-over-year profit _increases_. And thus it was, simply by magical fiat (or decree): Poof! You qualify. Now _that’s_ the way to develop your market!
Yes, _like_ blaming the drug dealer. But the drug dealer does nevertheless share the blame. The banks helped create and nurture the demand, by relentlessly telling its customers and prospective customers that they needed their bogus products. Indeed, to this day, CapitalOne, e.g., tells me to use my convenience checks “for money you deserve.” They have fostered a sense of entitlement without limit and without relief. An entrenched part of our consumer culture, they even pre-fill-in the convenience checks _for_ me and remind me that, if I don’t have some well-deserved vacation or needed jewelry (Bernie?) or home improvement or tuition in mind, I can still use it for money “just to have.” Didn’t Lehmann Brothers need some money “just to have?”
I’m shocked at such a suggestion! Next, someone will say there’s gambling in Las Vega.