Simon Johnson notes something big that Goldman Sachs dances around in its report on its internal culture released this week (to front-page play in The Wall Street Journal and Financial Times):
The Goldman report does have one revealing statement (on page 1, under their “Business Principles”): “We consider our size an asset that we try hard to preserve.”
As John Cochrane, a University of Chicago professor and frequent contributor to The Wall Street Journal put it recently, “The incentive for the banks is to be as big, as systemically dangerous, as possible.”
This is how big banks ensure they will be bailed out.
And Johnson continues to be the leading thinker on financial capture:
The Obama administration, House Republicans and banking executives like to frame the discussion about financial regulation in conventional political terms, with the “left” supposedly wanting more regulation and the “right” standing for less regulation.
But this is not a left vs. right issue. Professor Cochrane is not from the left of the political spectrum; nor is Gene Fama, who signed the Admati group’s letter to The Financial Times; nor are numerous other leading finance people who agree with this position (as the list of Admati signatories makes clear). Mr. King is a consummate apolitical technocrat – as is Paul Volcker, who has been hammering away at these themes for a while.
The financial sector captured the thinking of our top regulators over the past 30 years. It continues to exercise a remarkable degree of sway – as demonstrated in the very small increase in capital requirements agreed upon in the recent Basel III accord.
— It seems like homelessness hasn’t got much attention in this recession. William Alden of The Huffington Post takes a look today and reports that homeless rate for families jumped 9 percent last year.
As foreclosure and unemployment rates have swelled to epidemic proportions in the past two years, the ranks of the American homeless have grown: the number of homeless families rose 4 percent in 2009, and then 9 percent last year, a pair of new reports show. In effect, even more Americans were homeless than those numbers suggest, stranded in the awkward process of staying with friends and relatives, for lack of a home of their own. Instances of families “doubling up” between 2008 and 2010 rose nearly 12 percent.
Meantime, millions of homes built unwisely in the bubble, sit empty.
Presumably, the homelessness problem will only worsen as the 99ers lose their last benefits.
— I noted on Twitter the other day that it seemed “Tiger Mother” Amy Chua, author of that troll-bait essay in The Wall Street Journal, seemed to be saying that the paper senationalized her piece with the headline.
Now, Chua is criticizing the paper more directly for selectively taking passages of her book and distorting it to put out a sensational, provocative piece:
Chua responded to a brief message I sent her introducing myself and asking for an interview bysaying that she was glad to hear from me, as she’d been looking for a way to discuss her misgivings about the Journal article. Apparently, it had been edited without her input, and by the time she saw the version they intended to run, she was limited in what she could do to alter it.
“I was very surprised,” she says. “The Journal basically strung together the most controversial sections of the book. And I had no idea they’d put that kind of a title on it. But the worst thing was, they didn’t even hint that the book is about a journey, and that the person at beginning of the book is different from the person at the end — that I get my comeuppance and retreat from this very strict Chinese parenting model.”
This wouldn’t be the first time we’ve noticed the Murdoch version of the paper sensationalizing stories.
(h/t Matthew Ingram)
UPDATE: A WSJ spokeswoman emails a response:
“We worked extensively with Amy’s publisher, as we always do with book excerpts, and they signed off on the chosen extract in advance. Since the publication of the extract in The Wall Street Journal, an extraordinary global conversation has begun about the book and its observations on contemporary parenting and the potential of children.”
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.