@tinyrevolution A career-long ambition that so far as eluded him.
— billmon (@billmon1) August 28, 2013
Andrew Ross Sorkin, professional NYT courtier to the One Percent, softballs former Treasury Secretary Henry Paulson, who has a book to sell:
Five Years After TARP, Misgivings on Bonuses
“There was such a total lack of awareness from the firms that paid big bonuses during this extraordinary time.”That is what Henry M. Paulson Jr., former Treasury secretary, said last week. We were discussing the 2008 financial crisis in light of the approaching five-year anniversary of those white-knuckled days, when Lehman Brothers collapsed and the government stepped in to bail out the American International Group and then the banking system….
Five years on, Mr. Paulson, assessing the success of a bailout program that clearly helped stabilize the economy, said that the bonuses that the banks paid after the bailouts — a record $140 billion in 2009 — were a primary reason for the public outrage over the program he worked so hard to persuade Congress to pass and the country to support.
“To say I was disappointed is an understatement,” he said. “My view has nothing to do with legality and everything to do with what was right, and everything to do with just a colossal lack of self-awareness as to how they were viewed by the American public.”…
Asked why he held his tongue until now about his misgivings on the way Wall Street paid bonuses after the crisis, Mr. Paulson, who was formerly the chief executive of Goldman Sachs, said he didn’t want to be “piling on.”
Banking is “not only a very honorable profession,” he said, “it’s a very necessary profession.”
He said the hardest part of the bailouts for him was in the disconnect between the bailouts’ ugly image with the public and his faith that the bailouts would help keep the economy from collapsing.
“I understood that people were angry,” Mr. Paulson said. “They wanted to hear that those that made the mistakes were going to be held responsible. Then on the other side was stability. It’s hard to punish and save the banks at the same time.” He paused for a moment. “I was much more concerned with stability.”
If only we peons understood what a demanding, thankless task it is to continually apologize for our lack of appreciation!
The Dangerman
They wanted to hear that those that made the mistakes were going to be
held responsibleswinging from lampposts.FTFH
Villago Delenda Est
When we finally get around to hanging the banksters, we need to make sure Andrew Ross Sorkin hangs with them.
Then we can start looking for people willing to work in a boring banking industry.
? Martin
True. But these people were not banking. They were gambling, cheating, lying, coercing, destroying.
Alas, when we needed them to be jumping, they didn’t do that one simple thing.
jonas
Shorter Paulson: “I thought Wall Street bankers were cool. Then they all acted like a bunch of whiny, entitled assholes during the financial crisis. But whaddya gonna do? Amirite?”
Mnemosyne
@? Martin:
You beat me to it. There’s a difference between banking and gambling with other people’s money and then holding your hand out for a government bailout when you bet the wrong way.
PeakVT
… Mr. Paulson, who was formerly the chief executive of Goldman Sachs, said he didn’t want to be “piling on.”
Oh, yes, those precious banker fee-fees. As long as they go unbruised, we can all make our mortgage payments. Or something.
I say we draft all the bankers and send them off to take down Assad. It would be a classic win-win scenario.
Jane2
@? Martin: This. Thank heavens for Elizabeth Warren….but i doubt even she will make a dent in this gang of criminals.
Jane2
@PeakVT: You win the thread.
TG Chicago
What? No, it’s not. Save them with strings attached. Easy.
Stillwater
A shout out to A Tiny Revolution. That’s a great blog. Jon Schwartz is well worth reading.
Nicely done AL.
Anne Laurie
@Villago Delenda Est:
Now I have a video playing in my head of ARSorkin scrambling behind the angry mob, sobbing as he tries to save his precious bankers from strangling by grabbing their dangling legs and pulling as hard as he can…
mai naem
@PeakVT:I would totally be willing to pay extra taxes to make that happen.
Kay
My memory of that time is how Bush just checked out. He was cranky and defensive and then he stopped appearing at all. Hank Paulson was the only one who was out there.
I felt like Bush was pissed off that he was still President when the whole thing fell apart, so he just wasn’t going to speak to us anymore, about anything.
Suffern ACE
It’s not piling on when the “poor victim” is on top of the pile.
mai naem
If you think Andrew Ross Sorkin is bad, watch the asshole across from him on CNBC in the AM – Joe Kernen. AR Sorkin may be giving Wall Street a French Kiss but Kernen gives a total blow job.
James Hare
I’m still trying to understand how we would be better off with a legal system that allowed us to prosecute bankers when it’s not clear they broke any laws. I don’t understand the mindset that says that the regulatory framework prior to 2008 was so flawed that the crisis was inevitable AND that those who worked within that legal framework should be held criminally responsible for their actions.
Either the bankers were breaking the law and should be prosecuted (or strung up from lampposts as some here seem to be suggesting) OR the the regulatory framework prior to 2008 was insufficient to prevent a crisis. Both cannot be true. If the bankers are a bunch of criminals the regulatory framework was sufficient and they broke the law to defeat it. If the regulatory framework was insufficient the bankers followed the law and it failed to prevent crisis.
I think there’s a bit of column A and a bit of column B. We’re still working out who was breaking the law and beginning those prosecutions when we have enough evidence to actually convict. When you’re taking on folks who bring home 7 figures you better have all your ducks in a row before you prosecute.
different-church-lady
He’s right that banking is an honorable profession. He just seems to be missing the part where we allow so many patently dishonorable people practice it.
James Hare
@Kay: That was about the best thing he could do. He had lost the public so thoroughly at that point that intervening in any way would have poisoned the well so much the actions that were necessary to stabilize the financial system would have become nearly impossible.
Mnemosyne
@James Hare:
I don’t entirely disagree with you that it’s not clear if laws were actually broken, because the banksters were very careful to give themselves legal cover before they started their shenanigans. But in a non-broken political system, the banks would have been swarmed with regulators trying to figure out what went wrong, how to fix it, and how to prevent it from happening again. Instead of which, we applied a band-aid, tightened up a couple of regulations, and crossed our fingers to hope for the best.
Stillwater
It’s hard to punish and save the banks at the same time.
Punishment is imposed on people. Banks, being abstract entities and all, are not people (so far as I know) and cannot be punished. Why would he collapse such an obvious distinction?
mai naem
@Kay: Bush is a big fat chickenshit idjit. He uses the excuse of his stent placement in the beginning of Aug not to show up for the MOW today. You damn well know he was invited months ago and the mofo refused then and now uses the excuse of the stent. Bush checked out as soon as he won his second term. He just wanted to retire and make money from speechifying.
danielx
Quelle surprise! And not only that, Wall Streeters feel unappreciated as well.
Honorable profession, is it? Horseshit of the purest sort. What Goldman Sachs and any number of other Wall Street firms (and other banks for that matter) have engaged in for some years now has nothing to do with banking and everything to do with treating the economy as a big casino in which those same firms have the cards marked and the roulette wheels wired. Some sort of scandal involving billions and also involving supposedly honorable and honest bankers has oozed into the light every three months or so for the past five fucking years. Then there’s that whole bit about individual bankers selling their own companies down the river for fun and profit – you know, that whole bit about “I’ll be gone, you’ll be gone”, you remember that part?
Very honorable profession, indeed. Jeebus help us, it’s like listening to Stephen Colbert on a good night. How did that sonofabitch keep a straight face?
? Martin
@James Hare:
I think you misunderstand the scope of regulatory frameworks.
They don’t exist solely to determine what is legal and illegal. They include provisions to monitor compliance and in many cases incentives to comply without the threat of legal action. For example, nuclear regulations don’t simply establish penalties for non-compliance, but mechanisms to ensure that a nuclear accident simply never happens. Whether or not a crime is committed along the way is a necessary part of the regulation, but is actually somewhat independent of what the regulation intends to achieve.
Yatsuno
Meteor. DC. Naow.
Kay
@James Hare:
Maybe. I remembered the “ownership society” though, so I felt like it was cowardly, that same sort of irritable, annoyed denial I saw when Iraq went bad.
It was a constant theme in the Bush Administration, home ownership. He used it to campaign for privatizing Social Security. We would “own” our houses and our retirement accounts.
scav
Honorable / Horrible, close enough for bankers work. See repossession mistake in West Virginia for the latest installment in their work. Threw out your entire life history and possessions while you were out? oh, whoops? Mis-take. Error in Address and then we got the wrong town entirely. But hey, these things happen, as do the forged and autosigned paperwork. Honorable and necessary.
but hey, there may be no specific law against it so some will call it moral.
Suffern ACE
@James Hare: We do have a mechanism. It’s not generally prosecution, per se, but a way to unwind vetures that have gone sour without shipping everyone to debtor’s prison. But unfortunately, that does not work when all of the major financial institutions need to use it at the same time.
I’m still wondering what the consequences would have been of bailing out the banks but making them keep two sets of books. One that showed them to be bankrupt (their actual financial condition) and one that showed their condition once the TARP funds had been accepted with the “bonuses” paid based on the former and not the latter.
The banking bonsus system made no sense whatsoever to those of us in the private sector who’s bonuses are tied to our individual performance, the performance of our departments AND the overall performance of the companies we work for. I can’t imagine why this idea that “well my department did well even though I entered into a bunch of contracts with people who couldn’t pay therefore I am entitled to the bonus in my contract” couldn’t have been done away with during the TARP negotiations.
Hawes
Banking is, indeed, a necessary function. And it was once an honorable profession. Say from 1933-1999.
Commercial banking, providing loans that make small business thrive, puts people in homes, helps people get money when they need it… I guess there’s honor in that.
But “banking” quite being about that a long time ago. Long enough ago for Hank Paulson to know better.
danielx
@scav:
Possibly pushing the blindingly obvious, but moral has nothing to do with legal. Not like there hasn’t been a ton written about how everything is fucked up and nobody goes to jail.
That’s where that whole “bankers own the place” comes in. Nothing is ever going to happen to people who made hundreds of millions while knowingly sending the country down the tubes, because they’ve got too much juice.
There’s a club. You are not in it.
I suppose there’s hope for me yet; I still have the capacity to get seriously irate every time I read one of these stories. Let alone the stories about the ratings agencies producing totally crap ratings in exchange for fees, or mortgage backed security issues being designed to blow up, or…I feel my blood pressure going up. Again.
scav
@danielx: Run across the latest report of same? Want a job where you can fail and still get paid lavishly? Try corporate CEO
.
SG
@Hawes:
There’s another thing that Paulson knows better: Propping up the banks to stabilize the economic system does not preclude punishing the individual executives who broke laws, perverted the system into a rigged casino and personally pocketed millions while ruining millions.
Romney may say corporations are people, but people are not corporations. None of those fuckers were so indispensable that they couldn’t have been fired and prosecuted. Instead, they got obscene bonuses while their victims lost their homes and livelihood.
Ted & Hellen
Anne Laurie, you racist Hilbot you, why do you hate the one?
Mnemosyne
@Ted & Hellen:
For you, Hank Paulson is the one?
I guess there’s no accounting for taste.
Splitting Image
@Kay:
In fairness, the market collapse wasn’t caused by home ownership so much as the derivatives market. Without that, a bank or two may have gone belly-up, but that would have been it. It was packaging the iffy mortgages into an AAA-rated investment and having it insured by AIG at many times its real value that brought everything else crashing down.
TG Chicago
@James Hare:
Incorrect. Imagine if the speed limit in front of a school was 70 mph. That would be an insufficient regulation to prevent a crisis. However, it’s still possible someone could have been driving 80.
Petorado
Paulson needs to understand that no profession is inherently honorable: honor is bestowed upon people when their works benefit others far outside their inner circle. For instance, Josef Mengele will never be confused with Jonas Salk. Just as not every banker can be condemned for the excesses of the past decades, neither should all of the Fabulous Fabs and London Whales be glorified for their unpunished, imprudent, and petulant risk-taking with other people’s money.
What Paulson needs to realize is that “too big to fail” has meant “too big to suffer the repercussions of their failures.” Nobody wanted to see the institutions that vaporized much of their earned wealth liquidated the remainder of their assets, but neither did the public wish to see the people who failed their trust so severely walk away with millions in taxpayer-supported bonuses. Paulson should have seen that there was absolutely no honor in that. There still isn’t.
Brother Shotgun of Sweet Reason
I don’t look at them often, but that’s a great set of tags for this post. I particularly like the fact that “Jump, you fuckers!” has become a tag.
Bastards.
manyakitty
@Stillwater: But I thought that corporations were people, too, just like Soylent Green.
cvstoner
There was no lack of awareness. The bankers knew exactly what they were doing, and took great glee in thumbing their noses at the rest of us. That was (and is) the source of the rage. Not the size of the bonuses, per se, but that the bankers could get away with it knowing full well that nobody would stop them.
PsiFighter37
@mai naem: I thought he wanted to become the William Hung of painting.
low-tech cyclist
An idea that keeps coming to mind:
1) Bring back the draft, and fill most of the grunt-level jobs in the military that way.
2) Have probability of selection for the draft be proportional to your parents’ income.
Jado
@TG Chicago:
Except that they are sociopathic enough to balk at being saved with strings attached – either they get their bonuses and no one gets prosecuted, or they sit and watch while the whole ball of string unravels.
Tell me with a straight face that they wouldn’t burn the whole thing down just to get their way.
Jebediah
@low-tech cyclist:
We would never go to war again.
JustRuss
I guess I’m easy. Hand me $140 billion, and you can pile on me all you want.
Sad_Dem
@TG Chicago: Punishing someone to save them is the theme of Dog, Bounty Hunter. After the druggie who skipped bail is caught and on his or her way to prison, after having bankrupted whatever family member was dumb enough to mortgage the house (similarity noted), it’s hugs and tears and reconciliation all around. After the perp is placed in front of the music.