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Gabriel Sherman's piece on investment bankers and their woes has been the cause of much comment, not the least of which because are these dudes out of touch or what? Not just with the public mood of the country about their occupation, but with the mechanics of the financial crisis. You've got to love this:
“There’s this perception that the people on the Street were making money for nothing,” says a mortgage-investment banker. “You have a political and media class who make the mortgage originators and bankers out to be the villains. But are they? They were doing what Congress wanted them to do. Is the guy who lied on his mortgage application the victim here? This whole narrative that the downtrodden were the victims and the money guys were the perpetrators really doesn’t stand up to rational challenge.”Heh. Presumably, "what Congress wanted them to do" refers to the Community Reinvestment Act, which for the millionth time did not cause the crisis. Fannie Mae or Freddie Mac played a role in the crisis that had less to do with congress and much more to do with reacting to private markets.As to guys who lied on their mortgage forms, my god, you didn't even have to lie to get a mortgage. The subbiest of sub-prime loans were no-income, no-asset loans, which are exactly what they sound like. Other borrowers were offered sub-prime loans even though they qualified for prime options. Not even to mention blatant mortgage fraud on the part of issuers. The due diligence performed by the mortgage brokers was embarrassing; the due diligence performed by the investment banks that bought the securitized loans was non-existent. This banker is basically saying that he didn't bother to check on the quality of the investments he was making tons of money buying and selling, but now that it's all blown up in his face, how dare those people try and get a loan! The piece also shows the anger of bankers at the Obama administration specifically:
The anger masks a deeper suspicion that Obama fundamentally doesn’t respect their place at the table. “I think he doesn’t have an appreciation for how hard it is to build these companies, the blood, sweat, and tears that goes into them,” says a senior executive from a failed Wall Street firm. “It’s just that he has no passion for it. He speaks dispassionately about the whole situation, except when he’s beating up on the Wall Street fat cats.”The argument that Obama has in fact done a great deal to help Wall Street—to the tune of trillions of dollars—doesn’t have much truck with these critics. “If you really take a look at what Obama is promising, it’s frightening,” says Nicholas Cacciola, a 44-year-old executive at a financial-services firm. “He’s punishing you for doing better. He doesn’t want to have any wealth creation—it’s wealth distribution. Why are you being punished for making a lot of money?” As a Republican corporate lawyer puts it: “It’s the politics of envy, and that’s very dangerous.”It's pretty clear, not just from this article but also from the everyday public statements of major financial institutions, that bankers are not happy with the Obama administration's response to the financial crisis. Folks like to say that the administration is in Wall Street's pocket, but that's not what Wall Street thinks. The administration's philosophy really has been standing between populists and financiers, as the famous quote goes. It's not a great place to be, but hopefully comments like this will motivate the administration to act with less deference to established interests in fixing the credit problem. After all, it's clear that they're not going to be friends afterward. Presuming, of course, an afterwards.
-- Tim Fernholz
