Everywhere this month we are pummeled with finance-sponsored drivel and half-truths a decade on from the 2008 meltdown. This morning as I was driving, it was retired Royal Bank CEO Gord Nixon’s turn to pontificate on CBC radio about how he managed to steer the bank safely through the ‘Lehman collapse’. Conveniently of course, with no mention of the taxpayer funded-backstop, the Canadian banks tapped in the process.
An even greater insult to thinking minds everywhere, was JP Morgan CEO, Jamie Dimon’s public joust last week with President Trump, with Dimon bragging that “his wealth wasn’t a gift from daddy”. Apparently Jamie believes the rest of us are too dumb to understand that he has become a billionaire over the last decade gorging on taxpayer-funded largess funneled to him and his cronies via politicians and central bankers.
Thankfully, not all of us are fast asleep. Better Markets President and CEO, Dennis Kelleher, offers an antidote to revisionist financial historians in his must-read look-back today Goldman Sachs failed 10 years ago today, to wit:
“As proved by an email from ten years ago (reproduced below), Goldman Sachs was ‘toast’ and would have gone bankrupt but for being bailed out by the United States government and taxpayers. Those bailouts saved the bank and the jobs, status and wealth of all the Goldman bankers. For example, the astronomical wealth of CEO Lloyd Blankfein, former President Gary Cohn, and all the other Goldman partners only exist today because they were bailed out. Just like the shareholders in bankrupt Lehman Brothers, their stock and options would have been worthless, including the recently reported $3 billion ‘Goldman partners’ haul on crisis-era options…
“While many are remembering the 10th anniversary of the collapse of Lehman Brothers and the onset of the worse financial crash since 1929, there is too much spin, self-congratulation, and omission or denial of the actual facts. As we have detailed, the crash had many causes, but a big one was the reckless and illegal activities of Wall Street’s too-big-to-fail firms, which were nonetheless bailed out without any accountability. On this 10th anniversary, it is important to remember that Goldman Sachs and the other too-big-to-fail financial firms only exist today due to the generosity and decisive role of the U.S. government and taxpayers in stopping the crisis and saving those Wall Street giants with trillions of dollars in bailouts. False narratives, forgetting or ignoring those facts and so many others may be comforting to those on Wall Street and their allies, but it blinds them to what is happening in the country and why.”
The facts remain that ‘Lehman’ was a symptom not the cause of the 2008 collapse. The cause of the global economy’s collapse was the decade of low rates, lax lending, speculative behaviors and increasingly reckless financial firms extracting quick profits at the expense of longer-term strength and viability. And because directing minds were not punished for their illicit acts and negligence, and indeed further enriched and promoted, rather than stripped of their spoils, these problems have grown bigger and more menacing for all of us since.
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