Mystery Men of the Financial Crisis

New York Times ^ | February 4, 2010 | William D. Cohan

[lbryce]

Now that we have pulled back sufficiently far from the near “destruction of the modern financial system” — as the former Treasury Secretary Henry Paulson described the events of 2008 in his new memoir, “On The Brink” — to focus on how to prevent such a calamity from recurring, the time has come to hear from those players in the drama who really know what happened and why.

Until people such as Warren Spector, the former co-president and head of the fixed-income division at Bear Stearns, and Dan Jester, a mysterious former Goldman Sachs banker turned Treasury official — among many others — come forward and share with us the roles they played before, during and after the crisis, there is little hope that the members of Congress working on financial reform legislation will be able to craft a bill that will succeed in its mission, and the longer they will spend dithering with the ill-conceived ideas being pushed by the former Fed Chairman Paul Volcker.

To date, these elusive but important Wall Street executives have kept an exceedingly low profile, hoping against hope that the whole thing just blows over. We can’t let that happen. There is just too much at stake now, and Wall Street has proved repeatedly over the past 40 years — since the firms went from private partnerships (where partners had their entire net worth on the line) to public companies (where bankers and traders were encouraged to take huge risks with other people’s money) — that it is incapable of regulating itself.

We need to get beyond the amusing political theater of the recent Financial Crisis Inquiry Commission hearings featuring tight-lipped Wall Street chief executives like Lloyd Blankfein of Goldman, John Mack of Morgan Stanley and Jamie Dimon of JPMorgan Chase

[JasonC]

It isn't. The government through an agency merely regulates some of what banks can do with it. It remains in the hands of banks and their customers. Their credit freedoms are just restricted - in a tightened direction. Without a Fed, you don't get tighter money, you get wildcat banking were anybody can make all the money they like. Then every five years people can repudiate great gobs of it as worthless. Oh joy. We tried, that, it sucked.

[Leisler]

So when FDR called in, made illegal gold certificates...that wasn’t a ‘make’ moment?

What about when Nixon took the US off the gold standard?

Last October, Paulson and Bernanke and Sheila Bair called in the major banks heads to the Treasury and forced them to sign up for funds? Patty cake?

What happened to GM bond holders? Love kisses?

The foundations of Washington power is violence, force.

[Toddsterpatriot]

Where did the bulk of the M1 dollars come from? Who made them, and can call them in( as it has ),

The Fed can add to or subtract from M1 when they feel the need.

If you have something, and in a way a other party can come and repo it, or part of it, or add to it, as they see fit, I’d say they control it.

Now that we agree that the Fed can change M1, what does that have to do with your earlier (incorrect) claim?

[Leisler]

"...merely regulates some of what banks can do.."

Yeah, it's on a three page rule book. Everything else they are free to do.

[JasonC]

You aren't forced to use US dollars for anything. Ever. You never need to own one or to touch one. You never need to account in them, measure in them, or be so much as aware of their existence.

If you voluntarily choose to use them, for anything, or find them convenient, for anything, then they benefit you. You may wish you also got free pie and ice cream, but if you freely use them, then the US dollar is a net benefit to you. Other people finding them extremely useful probably would be what prods you into using them yourself. Since your average checkout lady at Walmart wouldn't really know what to say about your sack full of crumbling blueberry scones. But you are free to try, and Walmart is free to tell you to stop wasting its time.

[JasonC]

Do you want banks to create money at will?

Yes or no please.

[Leisler]

Ah, yeah. Right. And..so..?

[Leisler]

Yes. I want free banking with private money. In general I trust private goods and services as lower cost, better quality, more filling of my needs and services than government goods and services.

[SunkenCiv]

Thanks hennie pennie.

[PGalt]

In general I trust private goods and services as lower cost, better quality, more filling of my needs and services than government goods and services.

BUMP!