Wednesday, November 05, 2014

Why Didn't Bankers Go to Jail?

I heard this again this morning:  President Obama is a failure because no bankers went to jail after the financial meltdown.

I worked in the financial industry.  I wasn't a banker but I worked with bankers, and I understood banking.  I think it's possible that no bankers went to jail because what they did wasn't actually illegal.  It was immoral; no question.  But in order to jail somebody, there has to be a law against what they did; and you have to be able to pin the violation on them.

Most of the financial meltdown happened because of a bunch of financial tricks and ploys, mostly called derivatives, which were invented over the preceding decade or so.  Some of those tricks and ploys were explicitly not covered by the securities laws - because the finance industry's men in Congress had written the laws to exclude them from regulation.  I refer you to the late Phil Gramm of Texas; a summary of his career is in this article in from the NY Times in 2008.

Further, most of the men we'd all like to see in jail are senior executives.  Believe me, the way big banks operate, the men in the executive office can legitimately claim that they didn't know what the guys on the trading floor, or the loan platform, were doing.  So there weren't any laws; and if there were, you couldn't pin them on the men who set the general policy that allowed the actions.

So quit blaming Obama because nobody went to jail.

Postscript:  if you're interested in derivatives, you can Google them; or you can look at the blog entries I posted, back in the day, under the tag Subprime Mortgages.  I wrote them up while I was watching my 401K dwindle (it came back, thank God).

For that matter, I've said all this before; see my post Finally the Truth, from October 2011.

Blaming Obama

I've been mulling this one over for a long time.  It's been 6 years since Barack Obama was elected president the first time.  He was elected again 2 years ago, which means he again persuaded a majority of voters to cast ballots for him.  And yet people of all views constantly blame him for whatever they think is wrong, as if he could correct all the sins of the world with a wave of his hand and simply chooses not to.

I'll take flack for this, but I don't need an explanation when I hear someone with a southern accent say, "I can't stand Obama."  Many from the South, especially senior members of Congress from the South, can't stand the idea of a black man in charge, and they don't bother to hide their feelings.  Interestingly, the self-identified Republican caller on CSPAN, who used the N-word about the president, was attributing hatred of "that n*er Obama" to Republicans in general.  (He was from San Diego, sigh.)  But I heard a caller on Michael Krasny's Forum program this morning ranting (in a New York accent as I recall) that he hated Obama even though he voted for him.  Why?  Because we went through an economic meltdown (which Mr. Obama was instrumental in ending, by the way), and no bankers went to jail.

I'll get to that in another post, but right now I want to posit a theory:  I believe a lot of the people (maybe even some Southerners, but certainly all the annoyed "lefties") who "can't stand" Obama, say that because he isn't doing what they wanted him to do.  They had an agenda item - jailing bankers, or raising the minimum wage, or "taking care" of immigration, or some other item.  He said he was on our side, and we assumed that he would take care of our agenda item. Then when he decided that other things were either more necessary or more possible, we felt betrayed.  I personally feel betrayed by his hounding of the press; he said he'd be "transparent," and he clearly isn't.

But I'm not in his shoes.  I don't sit down in that office and have to answer to the entire country, plus the rest of the world.  No one who has never been President of the United States can really grasp what that job is like.

And I think he's done a good job.  He's done a lot of what he promised; a lot of what he promised and didn't get done (immigration, tax reform) can be reasonably blamed on the Republican Party, which openly declared they wanted him to fail.

He entered office in something as close to the Great Depression as I hope we see in our lifetimes.  His team pulled the country out.  We are not where we'd like to be, but the financial system isn't in meltdown.  There was a time there where nobody could get any credit - banks couldn't get the short term loans they run on - that's now fixed.

He said he'd get us out of Iraq and Afghanistan; we're out of Iraq, and we're about out of Afghanistan.  Leaving Iraq may have been a mistake in hindsight, but I couldn't see any flaw at the time in the way he handled it; Al-Maliki's demands were not reasonable.  Leaving Afghanistan - we'll just have to see.  But he kept the promise.

He said he'd fix health care, and he did - more people now have health care than did before.  It isn't perfect, but it was designed by a committee and you know what that means.  (It didn't help that the U.S. government is incapable of managing large IT projects; but that predates Obama by decades.)

On top of all this, he is calm, dignified, intelligent, and publicly unflappable. You never have to wonder what he just said.  As far as I can tell, he's done overall about as good a job in the Presidency as anyone could do, under very difficult conditions.

I also want to give him credit for something he didn't do. He didn't get us involved in the mess in Syria.  I think he knew - and I agree with him - that if we send American troops into Syria, we will own Syria; and we'll own it for decades.  At some point the Middle East either has to fix itself or deteriorate into warring tribes.  I don't want to own Syria.

History will judge him, no matter what the Republicans say.  It will be very interesting, if I live long enough, to see what that judgment is.