Yesterday, we wrote about the outrage of the Fed still giving big banks a huge bailout subsidy, one that encourages the banks not to lend money, while screwing America’s savers with perpetual zero-per cent interest rates.(This outrage is the Fed paying banks “interest on excess reserves,” which has allowed the Fed to quietly funnel about $10 billion directly into bank coffers over the past couple of years, while average savers get screwed.)
We did not mean this as an attack on the banking industry or bankers–if the Fed wants to give the banks billions of taxpayer dollars just for being banks, we can hardly blame the banks for taking the money. The outrage here is that, two years after the financial crisis, with Wall Street having recovered and the real economy still sucking wind, the government is still giving banks enormous bailouts and subsidies.
But in any event…
Our rant struck a nerve with one banker, who aired his grievances to us in an email. Unlike many unhappy readers, this banker had the dignity and balls to clear the air under his real name, which we always appreciate. The banker did not ask us to keep his name confidential, but for the sake of his career, we’re going to.
Basically, the banker is mad as hell about being blamed for the economic collapse and he’s not going to take it anymore:
In your banking article (Fed Screwing Average American/Outrage of the Day), you describe how the fed is screwing all of us, and how great it is to be a banker.
Well, Mr. Blodget, its not all that great to be constantly heaped on by people in the media. You contribute to the rancor, cast aspersions on an entire banking institution (one of which you worked for – I used to read your research) whilst assigning no blame to individuals, rating agencies, congress, regulators, FASB, The SEC (Removal of uptick rule!!), Appraisers, Speculators, Agenda driven Hedge Fund Managers (Soros?) and litigious Attorneys General.
I enjoy reading your columns. Unfortunately, this one gets under my skin, as you portray those who are in finance (like an Advisor at Merrill Lynch, for instance…) as money grubbing, hand clasping, evildoers snickering at the populace.
MANY of us are trying to do the right thing by our clients. Trying to find the best investments, most attractive vehicles we can to those in retirement or saving for it. We battle a constant and unending torrent of bad news, outright lies, and misperceptions every single day.
How about assigning blame to the people who took out mortgages they KNEW they couldnt afford? How about blaming Congress for FORCING banks to lower standards for social purposes in place of sound economics? WHY WOULD ANY BANK LEND when politicians, legal teams, pension plans and global regulators are gunning for them? Looking to vilify, tax, pickpocket and isolate them with wagging fingers and unhelpful commentary. The banks didn’t ask for this. Contribute to it, yes. But many factions of the country share culpability. The constant barrage is unneeded and only serves to prolong economic agony.
You, sir, are better than this.
For what it’s worth, I completely agree with this banker. Most bankers are good people, and banks are absolutely not the sole cause of the financial crisis. Anyone who says banks are solely at fault is trying to deny their own culpability. Everyone the banker mentions above contributed to the financial crisis, along with a lot of other people.
This, by the way, is why financial crises like this have happened since the dawn of time and will happen to the end of time, no matter what new “regulations” we implement or who we blame in hindsight. The truth about why bubbles keep happening is that, when bubbles are inflating, everyone loves them. Bubbles make tons of people rich, they get politicians re-elected, they turn Fed chairmen into global celebrities and “maestros,” they pay for the building of vast (too much) new infrastructure, they create millions of new jobs, etc. And with the exception of a few carping shortsellers, who are always excoriated as unpatriotic, self-serving leeches, no one has an incentive to stop them.
(But the Fed paying banks not to lend is still an outrage…)