Now We Are “Ill-Informed and Under-Educated”

By James Kwak

A couple of weeks ago, Max Abelson got some investment bankers who used to work at Lehman to say what they really think about ordinary people:

“[Lehman]’s just not that big of an event. But that’s not what people want it to be, so they’ll make it not that way if they can. They just want to be mad and don’t know what they’re talking about and want to be outraged.”

“When I read this, I giggle a little bit. Because $50 billion is a s—load of money, but in the grand scheme of things, $50 billion is a drop in the ocean.”

“Yappers who don’t know anything.”

Well, the commercial bankers are not taking this lying down. They are out trying to prove that they can be just as offensive.

Speaking of the proposed Consumer Financial Protection Agency, bank president Robert Braswell had this to say, according to the News & Record of Greensboro:

“The consequences to the consumer will be equal or worse than what they’re trying to legislate away,” said Robert Braswell, president of Greensboro-based Carolina Bank. . . .

Banks, he said, will pass on added costs to consumers or stop offering some services, such as free checking. Braswell said when he has been on lobbying trips to Washington on behalf of bankers groups, congressmen and congressional staffers did not seem receptive to points made by those in the industry.

“There is no consideration to (whether it’s duplicative); there’s no consideration as to cost,” he said. “Those who are behind this legislation are absolutely ill-informed and under-educated . . . They refuse to consult with anyone who does possess the requisite knowledge.”

This isn’t even worth a point-by-point rebuttal. Insofar as the CFPA is duplicative, it duplicates powers that existing regulators didn’t use; and it also extends consumer protection to the nonbanks, which were not regulated at all. If free checking only exists because banks are gouging other customers, then free checking shouldn’t exist. Oh, and Tim Geithner, Michael Barr, and Elizabeth Warren are “under-educated”? I guess I am, too.

I would be encouraged by Braswell’s claim that congressmen and their staffers are not receptive to points made by the industry . . . except that it’s not true. Anyone who knows what is going on in Washington knows that the bank lobbyists have been punching holes in the legislation successfully for the past seven months. Maybe they’re not receptive to Braswell, but there are plenty of industry spokespeople doing a much better job — and not talking about it in public.

By the way, on the subject of Lehman and yappers, John Hempton has some good evidence that, yes, other banks were doing it, too. The main evidence is that Bank of America’s end-of-period assets were consistently lower than their average assets, which implies that they were doing something at the end of every quarter to massage the size of their balance sheet down. (Hempton also found matching imbalances in a specific counterparty’s balance sheet.) We had a brief exchange about whether there might be some business reason for this consistent imbalance (for example, in high-ticket sales businesses, most of the sales are clumped at the end of each quarter — but that’s an income statement thing, not a balance sheet thing), and he is pretty certain that there is no other explanation.

17 thoughts on “Now We Are “Ill-Informed and Under-Educated”

  1. Oh you’re darned right it’s not worth an exacting rebuttal. At this point I’m just waiting for some reporter/interviewer being told something like this:

    “The consequences to the consumer will be equal or worse than what they’re trying to legislate away”

    to ask if it should be taken as a threat by the public.

  2. They may not mean you, but they do mean me. I can live with this, though, because I’ve helped build 4 businesses from scratch (out of 5 attempts, not a bad record), and I did it by forging relationships with clients and customers. These people wouldn’t last in my organization long, not with that attitude.

    TBTF is vitally important, but the underlying attitudes, as well as the culture that spawns them, displayed here are another very real problem.


    Of course, all we need tell these people is: “Prove it.” How about independent teams of auditors go over these businesses to determine to what extent these people are telling the truth?

    Or not?


    Information is more powerful than money. To an enormous extent their power rests on the foundation that their marketing is the only information available, SEC filings included. Ask the people over at ZH what they think of the published balance sheets of banks.

    Your honors, I rest my case.

  3. Speaking of campaign reform here is how they did it in Canada.

    “Corporations, trade unions and unincorporated associations may no longer make political donations to candidates, registered electoral district associations or nomination contestants of registered parties.”

    “Contribution limits from individuals are now: no more than $1,100* in any calendar year to each registered political party”

  4. “Ill-informed and under-educated” is very true. He meant that in an ideological sense, that even though the people have been brainwashed enough that they let these horse thieves who were caught red-handed not only avoid the noose and go free but continue their crimes, their brainwashing hasn’t been sufficient to save the criminals the hassle of having to lobby against minor nuisances like a “CFPA” (which even in its strongest possible incarnation would still be just nibbling at the fringes of the problem).

    I agree that the people are ill-informed and under-educated, for the reverse reason. If they truly understood the nature of these rackets, of how the FIRE rackets are completely useless and completely malevolent, how they do nothing but cause monumental social, economic, and political destruction (not to mention how swine like those quoted here sadistically enjoy the crimes they commit and the massive harm they inflict): If the people were better educated about this, if they could overcome their brainwashing, they would simply eradicate this parasite.

  5. “They refuse to consult with anyone who does possess the requisite knowledge.”

    One of the female commenters on this site, who seems to get a lot of respect here, has in essence said the same thing many times. Others I would like to mention by name who claim mass ignorance to stifle any challenge or stricter regulations: let’s say a certain other blogger with a CFA who likes to review books, and a certain writer (who actually shows their own ignorance quite often) at FTAlphaville. These people point to anyone who asks for stricter regulations for investment banks and yell “Ignoramus!!!”. If some financial industry workers had their way anyone who asks for stricter regulations on banks would have to walk around with a scarlet “I” on their chest, the “I” for ignorance. Then they could go on raping us.

    There is a strategy among these bankers and financial industry workers to insult anyone from outside their industry who questions their ethics or dares to imply regulations should be stricter because (according to their creative narrative) we don’t have the “requisite knowledge” to know when we’re getting it deep in the rear.

    I think about 15% of finance industry workers actually believe it, and about 80% (we’ll assume 5% of financial industry workers actually care about society) think if they use these condescending tones enough repeatedly ad nauseam we’ll eventually believe it or just give up in exasperation.

  6. The “ill-informed and under-educated” have been known to use torches and pikes to solve their problems.

    The well-informed and highly-educated might want to keep that in mind.

  7. If you look at the Pyramid of power in the US, at the bottom there is the judiciary framework, and the lawyers have mastered the art of manipulating it to generate money. This framework is to control the mass or the common people. In the middle of the pyramid there is the legislative framework. This block is engaged in finding ways to convert those advices from the lobbyists to the president, into a legislature. Their interaction with the common people is limited to their TV ratings and the various elections they contest. And on the top of the pyramid you have the president and his gang. This is the most ‘powerful’ of the three and can have literally anything get thru under their nose if they want to. Here the interesting bit is that since they form the face of the government, they usually talk of things which will ‘tend’ to improve the living conditions of common people and make the world a better place to live in. Like the recently passed ‘Health-Care Policy’. They never open their mouth unless some cunning journalist asks them about the banking issues and how does it all add up to sustain the economy in the short to medium term after the bail outs. Where would the growth come from to sustain a favourable exchange rate of the $ and well, in the fantasy zone, what if Hu Jintao lets his Yuan float free against the US$ (imagine the impact such exchange rate swing would have on the US treasury owned by the Chinese Government).
    It’s extremely important to take cognisance of this unprinted power pyramid if you are out to make money which cannot be justified by any of the theories of economics. On the hindsight if it’s not the top bankers who are controlling the president and his confidants (a top-down approach), would we have a few Al Capones walking the street of NY/NJ and trying the have their influence with a bottom-up approach?

  8. What the bankers understand is that at their level money is infinite. Their actions to bite off enviable pieces for themselves really makes no difference, except to them. At the human level, for those unconnected to established swindles, money is scarce, and expensive. Nothing now being suggested by the Elizabeth Warren, Simon Johnson types, however well intentioned and apparently intelligent, is going to make any difference in this disconnect.

    The only way to keep the economic engine working (even at reduced capacity) is to continue paying tribute to finance, strictly a looting operation. The alternative is deflationary collapse.

    You cannot reform cancer. Individuals might as well forget politics and start planning personal escape routes. Good luck with that.

  9. To paraphrase M. Sarkozy “We are all hicks now.” That would include everyone on this site, Senators and critics like Paul Volcker. As a member of the great unwashed I have no right to question the infallibility of those who lost trillions.

  10. With this type of attitude, why bother with for profit banking for small-time customers? I understand that there are costs and fees associated with banking and the bank has to do what it needs to do to deliver return to shareholders. But, why not have legisaltion that encourages the growth of more credit unions or non-profit banking insitutions? Give me a real alternative to this madness. Credit unions have their version of deposit insurance.

    I sent emails to my Congressman, Senators and the Whitehouse. I also called the DC office of my Congressman.

  11. Ah, but you forget the SCOTUS ruling in Citizens United vs FEC in which “money” is free speech and corporations are people. In other words, corporations, trade unions, and any association (501(c)3, etc) may spend any amount they wish on or against any candidate’s election or for/against any legislation.

    As for the ability of mega-banks to influence legislation, guess who’s got all the money to buy PR and ad firms, lobbyists and guys like Frank Luntz to change perceptions by changing the words used.

    See Lawrence Lessig at

  12. Can you imagine a TBTF bank (or Big Pharma, Big Health Insurer …) being limited to an $1100 donation to a political party! OMG a slippery slope. It might even lead to singlepayer healthcare. What would the plebes ask for next!

  13. Looks like they removed the quote from News
    & Record of Greensboro page linked in the post.

  14. James, I refuse to feel nauseous any longer. I am getting really hardened to these kinds of deception, especially the kind practiced by bankers. It is the ultimate in “holier than thou” in every way. We just are not that ignorant. I just think about the old commercial for a Wall Street Firm (who it was slips my mind at the moment) that had the tag line: “We make money the old fashioned way, we earn it.” What happened to that ethic. When was the last time any TBTF banker actually earned what he was paid. Maybe 20 years. The rules are preset. We’ve legalized financial rape and now we’re going to outlaw wolf whistles. Gosh we’re sad. Time to go for the throat.

  15. Smith Barney is the name you’re trying to remember.

    And I agree … it’s been eons since money was earned versus conjured as it is now.

    What’s fascinating is how well the masses have been tamed though. Can you imagine the reaction of the kids in the 60s if their parents were doing all this? And now it’s those kids that are in fact the ones destroying the future – and they and their kids are silent for the most part.

Comments are closed.