With AIG bonuses and The Wire on my mind, one place I was itching to browse out to was the Freakonomics blog, where Sudhir Venkatesh has been keeping a panel of "gangland acquaintances" around to offer some insight into the financial news straight from the street. Today, Tim Geithner and Ed Liddy are looking pretty good in their eyes:
Portis, 42 years old and with a six-year grand larceny prison sentence under his belt, answered for Shine. "There's two kinds of brains you need to run a good business. Sometimes you need "Sleepy Heads." You know, the ones who pick up the money from the crews; the ones who make sure everyone got ammo; the ones who just do their job, don't cause no trouble. Then you need bona fide Killers. The Killers like watching you bleed to death while they are eating a plate of ham and collard greens. You understand?"
"What does that have to do with the financial situation?!" I asked, exasperated.
"See, by the time there's a crisis, the Sleepy Heads are already gone. They're the ones who keep the books, so they know where the money is, and they know when trouble starts. So they usually get out first. But at this point, in most of these companies, all you got left is the Killers. They're the ones who like hanging around, who ain't got no home life, who just love the blood, and the guts, who love the pain!"
"Again," I interrupted, "what does that have to do-"
"Never lose your killers. Never let them go, because you'll need them when things gets better. You can always get the Sleepy Heads back. They're hiding under a rock anyway. But the Killers! Those folks are hard to find, so you got to give up the money. Pay the ones at the top, the one's who like to smell blood. Let the Sleepy Heads go, but keep the Killers."
The upside? Well, I hate to open up the door to all the bellicosity, after this afternoon's "full metal jacket" diatribe on CNN, but Portis went on to remark: ""The real key to working with Killers is that you have to destroy one of them, just for show. Because as much as they like to see their enemies in pain, they love to see one of their own bleed even more. ... If you want to keep them hungry, kill one of them just for fun."
Fired By Twitter: The great thing about Twitter is it's brevity, and spontanaeity. The worst thing? There's lots of people who can afford to be less spontaneous, and 140 characters is still enough to hang yourself. That's the lesson one Cisco applicant learned the hard way, when his tweet - "Cisco just offered me a job! Now I have to weigh the utility of a fatty paycheck against the daily commute to San Jose and hating the work" - got picked up by someone at Cisco. Bad news. And the worse news is that the real story is all the hateful work Cisco is making people do in San Jose!
A Clarifying Scandal: Rick Newman says the upside to AIG is that after "all sorts of arcane explanations for what caused the problem," the AIG bonuses "are inadvertently serving a purpose far beyond their monetary significance," by removing "the cloak of quantitative sophistry that Wall Street has used to obscure its dealings from lesser mortals."
This Day In Debunking: Meanwhile Mike Lillis at the Windy penetrates the myths that have surrounded the Community Reinvestment Act:
Yet some myths don't die easy. And Republicans -- backed by the finance industry and encouraged by conservative pundits -- appear as willing as ever to blame the CRA for the collapse of the housing market. Indeed, Rep. Jeb Hensarling (R-Texas) reiterated that argument at last week's mortgage reform hearing, claiming that the CRA "helped put the federal government's seal of approval, not so much on helping raise the economic opportunities of the borrower, but instead bringing down the lending standards of the lender."
"I know the intent was noble," Hensarling added, "but the effect has been devastating."
Yet Braunstein's testimony told a different tale. She cited a Federal Reserve Board analysis which found that, in 2006, CRA-covered banks operating in CRA-targeted neighborhoods accounted for just six percent of the risky, high-cost loans largely responsible for the housing crisis. Mortgage loans are considered high-cost when interest rates are at least three percentage points higher than those of conventional mortgages.
"So I can tell you," Braunstein said, "if that's where you're going, that CRA was not the cause of this loan crisis."
Spot The Irony: Via Alex Balk: "'Micro payments would not work for me,' he said...'it works for iTunes because it's something you can listen to it over and over again, and, as good Tom Friedman is, I wouldn't want to read the same column over and over again.'"
Other Things Twitter Is Ruining: The Judicial System, apparently!