TARP is just a very small part of that migration of ethical actions toward the bottom of Dante’s inferno. Sad, but expected. Why is it that human beings find immorality so appealing, once they get a taste of the benefits of corrosive things, like great wealth or great power? It’s just a part of living in a very sophisticated jungle.

Nice that guys like you, Simon,(and don’t get me wrong, I am a great admirer and supporter) can sit in their academic thrones and pontificate to those who will not do anything to make your vision of reality come to fruition. But, they like to hear from you, so that they can say that all things have been considered before stabbing all of us in the back.

I have lived through a corporate near collapse and was a part of the group that staved off bankruptcy caused by a sudden change. The mental process of being shocked and dismayed separates those that can instantly and absolutely change views and direction from those that are ineffective at adapting to survive. It is this aspect of the financial crisis that has not been explored very much.

In the case of the US financial and political system the lack of procedures to quickly head off a sudden adverse change seem completely lacking from long term ideological infighting of elite factions and the nation as a whole.

We had a very close call. I doubt the system could survive another sudden shock of the magnitude of fall and winter 2009 crisis.

Professor Johnson must really have some insider experiences about the US elite players reaction and conduct during the crisis.

It was quite obvious to me that fear was causing huge cash flow drains and were not only bringing down those that failed but very likely a large number of other senior finance sector firms as well. In a number of ways we saw a replay of the Panic of 1907. After all, mutual funds are not all that different from the Trust Companies of 1907.

What was required was stabilization investment and TARP provided the funds and impetus to calm the panic.

Everyone wants to be hard nosed but few present a methodology. Here is a nasty one. All the big banks are seized. All withdrawl’s are frozen over an exception amount. The equity holders are entirely out. The non retail lenders lose a heavy part of their loans and get stock in the reorganized institution. The depositors lose a piece too! Both now own the bank. Let’s be even more hard nosed and the recapitalization winds up with a four to one leverage over revalued assets. But none of what I suggest provides funds to cover fleeing lenders to the institution. What happens when the withdrawl freeze ends?

Where would the financial system be had the “right thing” been done. The ” right thing” being doing elective surgery before treating a stroke.

Time and funds were of the extreme essence. Nothing else would work in the time frame under the circumstances.

Remember all the talk about seizing the banks? Rarely was a thought out methodology presented. Besides, the top elites themselves were obviously personally terrified.

“Senior Research Fellow, Rimini Centre for Economic Analysis, University of Bologna, Italy, 2008-present”

“Member, Federation of American Scientists Committee on Systemic Risk, 1995-96″ Classic.

“Consultant, 1989-91; Visiting Economist, 1988, Federal Reserve Bank of Chicago”

“Economist, International Monetary Fund, 1981″ (Just like Simon!)

http://www.aei.org/scholar/9

They do note that he is currently the “Henry Kaufman Professor of Financial Institutions,” but sadly they don’t tell us about Henry Kaufman:

“He was on the Board of Directors of the now defunct Lehman Brothers where he served as chairman of the Finance and Risk Committee prior to the firm’s bankruptcy. On March 19, 2009, Kaufman was named as a defendant in a lawsuit launched by New Jersey governor Jon Corzine on behalf of the state of New Jersey alleging fraud and misrepresentation associated with securities offerings undertaken by Lehman Brothers immediately prior to the firm’s bankruptcy. The suit seeks compensatory damages of $118 million in addition to punitive damages.[citation needed]

Dr. Kaufman is a recipient of The International Center in New York’s “Award of Excellence”

http://en.wikipedia.org/wiki/Henry_Kaufman

Here it says of Calomiris: “He is Chairman of the Board of Greater Atlantic Financial Corporation, a publicly traded bank based in the Washington D.C. metropolitan area.”

http://www0.gsb.columbia.edu/faculty/ccalomiris/CalomirisBIO2009.pdf

Why so vague, professor? It’s headquartered in Reston, Virginia.

http://www.gab.com/branch_locations.html

Calomiris snippets:

- Prof. of financial institutions
- Prof. at School of Int’l and Public Affairs
- Member, Shadow Financial Regulatory Committee
- Member, Financial Economists Roundtable (keep “Roundtable” in mind for future reference)
- NBER
-Council on Foreign Relations (of course)
- Hoover Institution Task Force on Property Rights (This property rights business is always lurking in the background. Maybe Mr. Kwak can bring us up to speed on what property rights will look like globally in a decade or so?)
- American Enterprise Institute (just like the other guy) Project on Financial Deregulation. This sounds juicy… do get us up to speed on what this is all about)
- CoB of “Greater Atlantic Financial Corporation” of Washington, D.C. (There’s that word “Atlantic” again.) Maybe some enterprising young investigative financial journalist (I’m looking at you, T) can figure out what these guys are up to?
- Int’l Financial Institution Advisory Commission
- Yale, just like James!
- Rec’d support from NSF, World Bank, Japanese Govt, Herbert V. Prochnow Foundation, and Garn Institute of Finance.
- See link for his consulting gigs. Salient: 4 Fed Banks, Fed Board, World Bank, govt’s of Mexico, Argentina, japan, China, El Salvador, Brazil, Colombia. BofA, Goldman Sachs, Lloyds, AIG, UBS, Citicorp, Fidelity, Fleet, Credit Suisse
- Apparently he’s really into emerging markets and financial innovation. He won a prize for his teaching. Taught at World Bank & IMF. Taught business ethics (sure he did).
- Recent speaking engagements at European Central Bank, IMF, Kansas City Fed, Central Bank of Chile, Brazilian Bank Assoc., and “Cayman Business Outlook, among others”
- Was the Paul Montrone professor of something or other. http://www.muckety.com/Paul-M-Montrone/7220.muckety

There’s even a “Paul Montrone Seminar Series on Ethics” “…an intimate series of roundtables which focus on real-life ethical issues and the consequences of decisions.” You can’t make this stuff up.

http://www4.gsb.columbia.edu/leadership/speakerseries/montrone

Montrone is on board of the Metropolitan Opera, just like Ezra Zilkha (friend of the CoFR), Josef Ackermann (junior board), CEO of Deutsche Bank. What a coincidence.

Alex Pollock: Space Ship Enterprise Institute For Publicity Policy In The Lurch. (Got to have our Chicago in the mix… he was CEO of the FHLB of Chicago, is director of the Chicago Mercantile Exchange, etc.)

Simon, this looks worse than when you sat in on that SEC thing with Bernie Madoff!

(You’re not going to tell us what you do all day, are you. Just give us a hint… does it involve David Miliband?)