Friday, November 19, 2010
The Devils of Wall Street
Rating Agencies - Sleaziness of Corporate Giants
The unholy alliance between large financial institutions, rating agencies, elected officials, and regulatory agencies revealed in fascinating details by Bethany McLean and Joe Nocera in All The Devils Are Here: The Hidden History of the Financial Crisis
- The title alludes to a line in “The Tempest” (“Hell is empty, and all the devils are here”), and fiends surely abound: subprime sleaze kings; bonus-happy Wall Street plutocrats; and, of course, Alan Greenspan, the fallen maestro of the Federal Reserve, whose see-no-evil free-market ideology made a virtue of unchecked financial recklessness.
JOE NOCERA: The astonishing thing about the run-up to the crisis is that this situation was happening all over the country. Lots of people on the ground could see it. And, yet, no one in government, whether it was the Fed, whether it was the regulators, whether it was Congress, was willing to do anything about it.
And -- and not only that. In some cases, like the bank regulators, they actively pushed back and stopped anybody trying to stop this kind of lending.
PAUL SOLMAN: Is Wall Street any worse than it ever was?
BETHANY MCLEAN: Yes, I think it's worse.
Wall Street, by the very sleaziness and impenetrability of its practices, set up its own run on the bank, because, when push came to shove, there was no transparency. And, even though in -- you can argue that this was a run on the bank, it was a run on the bank created by the way Wall Street did business. So, in the end, they only have themselves to blame.
The Financial Reform Act signed into law by President Obama in June 2010 does very little to restrain the rating agencies from continuing with the sleazy practices.