Plutocracy In Action

The Spectator interviews Michael Lewis on the 2008 financial crisis.

      The author of The Big Short weighs in:

“Not nearly enough has been done — the regulatory response has been totally inadequate. The big banks have blocked serious reforms, meddling in the process so incentives haven’t changed enough to attack the heart of the problem — which is why it could happen again.”

“We still have the same short-term-oriented compensation, the same big bonuses at year-end…”

“I’ve never gotten over the feeling when I learnt Goldman Sachs had designed securities that would fail, so they could then short them.”

“The 1997 repeal of the Glass-Steagall Act was part of the problem [] but it goes back even before that. The earlier transformation of investment banks into public corporations was a big mistake — with bankers using shareholders’ money to bet, rather than their own.”

“It isn’t just the big campaign contributions. Anyone at the table talking about financial reform is a potential hire and likely to end up working in the financial sector for huge sums, so they get captured.”

One Reply to “Plutocracy In Action”

  1. The movie version of The Big Short was riddled with inaccuracies and had this odd drooling bankers vibe that isn’t there in real life.

    The opinion of economists at large is that Glass-Steagal wouldn’t have done anything to mitigate 2008, and that “breaking up the big banks” wouldn’t do anything to the overall systemic risk.

    Dodd-Franks is a pretty serious set of reforms; a lot of what people are demanding has already been put in place, but nobody likes their outrage tampered with. Banksters are evil, mm-kay?

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