Rod Dreher

Panel of top economists, financiers and former regulators warns that the financial meltdown of 2008 may have been just the beginning. Excerpt:

In the report, the panel, that includes Rob Johnson of the United Nations Commission of Experts on Finance and bailout watchdog Elizabeth Warren, warns that financial regulatory reform measures proposed by the Obama administration and Congress must be beefed up to prevent banks from continuing to engage in high risk investing that precipitated the near collapse of the U.S. economy in 2008.
The report warns that the country is now immersed in a “doomsday cycle” wherein banks use borrowed money to take massive risks in an attempt to pay big dividends to shareholders and big bonuses to management – and when the risks go wrong, the banks receive taxpayer bailouts from the government.
“Risk-taking at banks,” the report cautions, “will soon be larger than ever.”

Hmm. A friend and reader of this blog wrote today, in response to my earlier post wondering what would become of the country if enough ordinary people, for whatever reason or set of reasons, quit believing in the government:

I do think the problem you pose about the faith of ordinary people, sensible people in the system is an important one — one that’s not asked enough. And there, I have to say I would put the matter somewhat differently: not whether ordinary people will lose faith in the system but when they will respond to the system having broken faith with them? For faith is a two way street, and that is what seems to me to have happened — not just under Obama (as the tea party people say), or under Bush (as liberals like to think), but going back at least to the point where basically the economic interests of the banks, etc., and the general interests of one class, increasingly in control of most of the nation’s money (while most people’s incomes stagnated at best) were allowed not just pride of place — that’s always true, not just in the US now — but virtual monopoly so almost no decisions were made with the interests of the broad majority of people in mind.

Now, you know this is not a political blog, and I really don’t want the combox conversation to get into blaming Democrats or Republicans. What interests me is the way the moral sensibilities of the U.S. majority may shift if we do not have what you might call a re-moralization of the U.S. financial structure — that is, the establishment of firm structures that keep them from behaving immorally, putting us all at risk. That’s what this panel is talking about. If the behavior of the big banks causes another — and worse — crash, we could be looking at the moral delegitimization of the American establishment (by which I mean the governing and financial establishment) in the eyes of many, perhaps most, Americans. This is very, very serious. This is, I think, primarily a matter of political economy, but even more deeply it reflects the moral order we are prepared to live under — and the moral accountability those with great power owe to the rest of us.
I think all the time about the high-level banker friend who left the industry and returned to the practice of his faith when he had an epiphany at an elite banker’s convention, seeing how unspeakable the luxury was: he realized that all this money they had control of had made these men and women — folks just like him — reckless and just about morally insane.

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