At the end of April, 2009, U.S. Senator Richard Durbin blamed the powerful banking lobby for the defeat of legislation that would have allowed bankruptcy judges to modify some troubled mortgages. Even as mortgage servers were claiming to be overwhelmed with requests from distressed borrowers for readjustments to the adjustable-rate mortgages (ARM), the banks and mortgage companies felt the need to stop the US Senate from enabling judges to relieve the backlog. Durban later said in an interview, “And the banks — hard to believe in a time when we’re facing a banking crisis that many of the banks created — are still the most powerful lobby on Capitol Hill. And they frankly own the place,” he said on WJJG 1530 AM radio's “Mornings with Ray Hanania.” On October 30, 2009, James K. Galbraith spoke on the Bill Moyers Journal on the bank lobby changing the financial system regulation reforms now being discussed in Congress. That that lobby feels itself to be in a position to advise the Congress on a matter in which the banks were part of the problem is something that blows Galbraith away. They should realize among themselves, or at the very least BE TOLD that their involvement is not helpful or appropriate. Galbraith pointed out that we have a pretty good idea of what needs to be done governmentally to stave off another financial crisis—such as separating the commerical banking and investment trading (on the bank’s equity even!) functions and reducing the scale of the banks too big to fail. However, there are a hundred reasons why the governing class will not follow through.
For one, we can look back to Durbin’s comment that the banking lobby owns Congress. The conflict of interest in the owner of Congress keeping Congress from legislating on the industry is a suffiicent basis for worry; that the lobby presumes itself to be in a position to advise or pressure on banking regulatory reform and that the lobby still has the muscle to see that it is still invited to the table strikes me as emetic. It shows the arrogance of the corporate world and the corruption of the governing class. The housing bubble and sub-prime mortgages were in the interest of both, and yet reform strangely is not. I would add that any voter who goes on, business as usual, in voting for an incombant is contributing to the perpetuation of the squalid system that we are now enjoying.
Imagine, just for a moment, that a friend or neighbor insults you. You invite some other friends over to figure out how to deal with that friend or neighbor. You are shocked when he or she walks in your front doorway (no need to hide) and sits down in your living room with the others. Not only that, he or she presumes to advise the group, adding pressure or outright threats that the group had better come up with something that is good for him or her. Here’s what I’m getting at: focus for a moment on the attitude of the friend or neighbor. In our normal interpersonal relations, we would rationally conclude that the person is delusional and excessively self-absorbed. We tend to let positions or organizations keep us from viewing their people as other (flawed) human beings. Arrogance built on presumption concerning a matter on which the person has screwed up and others are hurt is or ought to be a huge red flag for the rest of us (and our representatives!). I find this attitude to be far more difficult to understand and accept than the fact that industry lobbies have an inordinate amount of power in Washington.
I find myself thinking about the nature of presumption that can manifest as an illness where it is beyond the pale. That the person involved probably doesn’t even see this suggests to me that a rather dysfunctional lot has congregated in the upper rafters of American banking. What kind of a person pushes for his or her advantage in the efforts by others to clean up one’s mess? That they are allowed in the room is alone a sad testament; that our representatives are actually succumbing to them is sordid indeed. Of course, it is in the interest of big business that the political power be concentrated among the governing class in Washington. We are mere bystanders as the dance unfolds.
See related: Essays on the Financial Crisis
See related: Essays on the Financial Crisis
Sources:
http://www.politico.com/news/stories/0409/21962.html
http://www.huffingtonpost.com/2009/04/29/dick-durbin-banks-frankly_n_193010.html
http://www.huffingtonpost.com/2009/04/29/dick-durbin-banks-frankly_n_193010.html (“own the place” quote)
http://www.pbs.org/moyers/journal/10302009/profile.html
