Financial mess...redux

This is an old post that…I forgot to post!!! But I’m working on a book chapter about some of these issues so I thought I’d put this up now anyway just as food for thought.

I think it was on the CNBC show “Meeting of the Minds: The Future of Capitalism” which aired in May of 2009…but don’t hold me to this, but anyway, on that program, Larry Fink the CEO of BlackRock said that we got into this financial mess because we had a society that believed in housing. Now when I was watching the show I remember thinking to myself; “that’s just a lie!” But to say that may be a little to simplistic. The truth seems to me to be a bit more nuanced shall we say. I think we got into this mess because greedy mortgage bankers lent money to people who couldn’t afford to borrow that money. Bankers and money managers on Wall Street packaged those mortgages into securities without having the slightest understanding about the health of the underlying assets (CUSTOMERS) and ratings agencies were complicit in the entire scheme through an evident and obvious conflict of interest because they were being paid from the wrong side of the equation. What bothers me most about where we are is that the people who were responsible for this don’t want to take on any of that responsibility. If they don’t, if they’re able to deflect the blame and say that it was the low interest rates promulgated by the Fed or that it was all because the democrats were pushing home ownership for everyone, I’m afraid we’ll miss the real cause and be doomed to repeat this episode just with some other product. We are were we are because of greed, coupled with a lack of transparency, exacerbated by laws that made it easy to do, leveraged up by a ridiculously inadequate regulatory system, underpinned by a short term mentality that encourages making as much money as you can as fast as possible and bolstered by a long standing acceptance of the separation of commercial institutions from a responsibility for contributing to civil society in all of their day-to-day activities. “Market fundamentalists” want us to believe that “It’s business, it’s not personal.” But I’d like to suggest that if we had even a little more humanity in our businesses today we could have avoided a lot of this mess…just a thought.