Steven Pearlstein: Then and Now

What a difference a year makes!

Here’s the Washington Post’s Steven Pearlstein last February:

These guys won’t be happy until the government agrees to relieve them of every last one of their lousy loans and investments at inflated prices, recapitalize every major bank and brokerage and insurance company on sweetheart terms and restore them to the glory days, so they can once again earn inflated profits and obscene pay packages by screwing over their customers and their shareholders.

For the Wall Street wise guys, bailout politics is just another game to be played, another market to be manipulated, another set of risks to be arbitraged.

Here’s Pearlstein ten weeks ago on a “Wall Street fairy tale” (emphasis mine):

Economies benefit to the degree that financial markets efficiently allocate capital from those who have it to those who can make the most of it.

Surely, one measure of that efficiency is how little is skimmed off by the financial middlemen. So the next time someone tells you that it’s no concern of yours if Wall Street traders are earning a king’s ransom, remind him of the story of Goldman and Morgan and the financial wizards who thought they could spin capital out of straw.

Here’s Pearlstein from a separate February column (emphasis mine):

As with Daschle, it springs from a deeply felt but rarely articulated sense of entitlement that now warps the judgment not just of those on Wall Street — from top executives to hotshots on the trading desks — but of those throughout the upper reaches of corporate America. And over time, it has filtered out to law firms and consulting firms, where freshly minted MBAs and legal associates came to expect starting salaries of $150,000 and partners thought it their God-given right to draw $1 million a year.

All that is history. It turns out that those inflated pay stubs weren’t really a measure of genuine economic worth but manifestations of the mirage that was the bubble economy. Economically, they are no longer sustainable; socially and politically, they are no longer acceptable.

Here’s Pearlstein today:

I can have as much fun as the next guy fulminating about Wall Street bonuses, but it’s time to move on.

There’s nothing new to say, nor is there much that can or will be done about them.

So I guess this is where we remind Pearlstein of the “Wall Street fairy tale.”

Here’s Pearlstein from the first February column, in full-on pitchfork mode (emphasis mine):

Later today, nine Titans of Finance will testify before the unwieldy House Financial Services Committee about the fine mess they have got us into and how the first $350 billion in bank bailout money was used. The chief executives have probably wised up enough to know to leave the Gulfstream back home and fly in commercial with the hoi polloi.

Here’s Pearlstein today, bemoaning “populism” and blaming all of us for Wall Street’s sins:

One reason for the populist backlash is that people assume the bonuses are going to the same Wall Street wise guys who caused the financial crisis. Not true. Many of those who made the worst decisions have been fired, while many of those who will earn bonuses work in divisions that had nothing to do with the financial debacle. But it’s also important to remember that culpability for the crisis extends well beyond Wall Street bankers to asleep-at-the-switch regulators, conflicted rating agencies, sleazy brokers, greedy mortgage bankers, reckless money managers and millions of clueless homeowners, along with an entire country that insisted on living beyond its means.

And it’s strawman time!

The other misconception is that somehow Wall Street got all the benefit from the government’s rescue efforts while taxpayers got stuck with the bill. In fact, nearly everyone benefited to some degree from a rescue effort that prevented the collapse of the global financial system — every business, every hedge fund, every community bank and credit union, every insurance company, every worker, every homeowner, every pensioner and anyone with any savings or investment…

It’s populist poppycock to argue that it was only the big banks that benefited from this wide-ranging rescue effort, and that they alone should be responsible for paying the bill.

I’ll take this one. We all benefited from being rescued from financial apocalypse, but Wall Street caused the crisis (with an assist from (de)regulators). And TARP is hardly the only bailout they triggered. And it would be great if just once someone would answer the question of why homeowners en masse spontaneously went from responsible, hard-workin’ Amurricans to clueless idiots beginning around 2002.

And this is disingenuous:

He framed the fee as a repayment to the taxpayers for losses sustained under the Treasury’s rescue program, conveniently overlooking the fact that virtually all of the loss is likely to come from two bankrupt auto companies, an insolvent insurer and two government-sponsored mortgage finance companies.

That insolvent insurer would be AIG. You know, the one that the government used as a conduit for its backdoor bailout of Wall Street.

The more intellectually honest approach would have been for the president to avoid the questions of cost and culpability and support the idea of a small tax on every financial transaction.

“Avoid the questions of… culpability.” That’s just a tremendous position for a business journalist to take. Revealing, no?

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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 Follow him on Twitter at @ryanchittum.