Nobody loves a critic, they say, and from my experience at The Audit it’s mostly true. So I love it when journalists take our criticisms in stride.
Heidi N. Moore responds to my post this morning questioning whether deficit reduction was really a factor in why the U.S. won’t slap a windfall tax on its bankers.
I’ll agree completely with her that a big reason it won’t happen is “But Washington won’t act on a bonus tax precisely because Washington doesn’t want to punish bankers. It wants to keep those fat lobbying donations flowing in.”
Right. It’s gross, but it’s what we’ve got and it’s in no small part responsible for the crisis itself. There’s a direct line from those contributions to the repeal of Glass-Steagall, the refusal to regulate derivatives, the hands-off administration of regulatory functions by the Clinton and Bush administrations, the pre-emption doctrine that prevented tougher state regulation of financial institutions, etc.
Moore is dead on here:
When it comes to punishment, in fact, the government has thrown the game entirely. As of now, the banks are profitable; the government is running at a $1.4 trillion deficit and the Fed’s balance sheet is exploding with $2.25 trillion, mainly in toxic securities adopted from Wall Street. Wall Street took all the profit, and Washington took all the loss. In finance, profit and loss are the means of reward and punishment. Washington doesn’t know how to—or doesn’t want to—master the rules of that game.
It’s downright shameful and what’s worse is that the government won’t even tell us how bad it’s screwing us over. That’s what the late Mark Pittman sued the Federal Reserve to find out. He won, but the Fed is stringing it out with appeals. Would that the press would join together to force the government’s hand here.
These kinds of things have to talk louder than all those millions Moore points out the finance industry spends to keep those who do its bidding (you, too, Barack) in office. She says:
If the deficit-reduction isn’t a practical use of the bonus tax, neither is the idea of punishing bankers. Washington isn’t going to cook its golden goose.
I’ll agree with that—unless the people and the press start to throw Washington in the oven.
Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR’s business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu. Follow him on Twitter at @ryanchittum.