I have been pointing out since 2009, that the Obama administration failed its calling when it chose to not prosecute bank executives for the criminal activities they directed, oversaw and willfully overlooked in their companies. The financial crisis handed the new President the opportunity for global leadership in demanding personal accountability to curtail a corrupt and parasitical banking culture. But they opted not to take it, the world followed suit, and the rest is history. We are all continuing to pay the price to this day with the promise of much more pain yet to come.
The recent laying of personal criminal charges against auto-executives for massive fraud that misled customers, poisoned our atmosphere and led to illness, injury and death, is long overdue. It also publicly opens the obvious question once more of why car executives are being held accountable, while bankers still are not. An excellent reminder in the Globe today from Eric Reguly, see: Who got a free ride? Bankers, not car execs:
Volkswagen is paying monster fines, but its managers are not being shielded from the consequences, as the indictments have shown.
Why the United States is letting bankers who behave badly go, but not the auto guys, is an open question – is it because Volkswagen is a foreign company? Whatever the case, the Obama White House and the Democrats in general did themselves zero favours by going easy on the bank bosses. Bankers are unpopular, and immoral bankers who walk free are especially unpopular – hated even. Their free passes no doubt help to stoke the anti-establishment sentiment that propelled Mr. Trump to power.
Incidentally, in a related point and also discussed in the Globe today, Canada has hired an ex-Goldman Sachs executive to head our critically needed Canada Pension Plan fund. CEO Mark Machin’s so-called new big idea to achieve capital targets amid low yields and an aging population? Not increase contributions and manage risk carefully to ensure sufficient capital, but rather increase risk and make bigger, bolder bets in the hopes of winning higher returns in the long run. See: “I understand lots of other things, but I don’t understand Canada.
Bankers get rich by selling the public risk in exchange for our cash savings. They feed themselves first. When the bets go bad and our savings blow up, the bankers keep their bonuses and commissions and explain how the losses we incur are not their fault. This is their DNA and business model. In the process they end up with the money and we–clients, customers, taxpayers–are left holding all the risk. When will we learn to stop handing them our trust and financial vulnerability? How much do we need to lose and suffer before we understand the financially suicidal folly of these choices?