Monday, June 01, 2015

But There Isn't a Problem with the Financial Sector

Dick Fuld, the financial genius whose leadership ran Lehman Brothers into the ground (Yes, I know he had plenty of help from several other financial deities, notably Goldman Sachs, but it wasn't like he was resisting their siren songs.), crawled out from under his rock last week for the Marcum Microcap Conference.  He immediately blamed the government for the financial crisis, by "forcing" lending to "unsuitable borrowers."

I'll be the first to say the government screwed up in this mess, and that it in fact made things worse by pumping up the bubble by expanding the pool of "eligible" borrowers beyond what was advisable.  But what really caused the mess, people?  Fast and loose fund raising by the banks?  Even more fast and loose lending with fraudulent appraisals and credit checks?  Definitely.  If the government was to blame, it is because it was criminally asleep at the switch in controlling all this fraud.  But the banks were the core of the problem and remain so because of people like Fuld, who remain in charge and continue to blame anyone but themselves.

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