03/18/2010 05:12 am ET Updated May 25, 2011

Catch-22 Billion

For Bankers, Saying "Sorry" Has Its Perils

As a kid and Air Force brat, I didn't like Catch-22 very much. The novel, while laugh-out-loud funny, speared the military and hit too close to home. As a blogger and novelist, however, I admire Joseph Heller's writing techniques, especially his use of repetition. In Catch-22, different characters keep asking: "Are you crazy?"

The boys -- Lloyd Blankfein, Jamie Dimon, John Mack, and Brian Moynihan -- are back in Washington today. Though the words may differ, politicians are asking the same question on behalf of the American public: "Are you crazy?" Wall Street CEOs, it seems, have tripped over a financial version of Heller's chicken-and-egg classic.

How can you apologize for dropping global capital markets to their knees through leverage, CDOs and other Weapons of Money Destruction? How can you say, "I'm sorry," without pouring lighter fluid on shareholder lawsuits and incurring the wrath of your board, which will no doubt fire you for artless communication?

How can you acknowledge that government intervention, during 2008 and 2009, revived the world economy? How can you admit mistakes in one breath and then defend massive performance bonuses in another?

And here are the toughest questions of all, hat tip to The New York Times. How can you package troubled mortgage assets and pass them off as legitimate investments? How can you market toxic waste and then take the opposite side of the trade?

So much for Wall Street being long-term investors in their own firms. I believe the fury over bonuses, in the wake of the last eighteen months, will trigger a regulatory tsunami. And those regulations could undermine our finance industry's ability to compete abroad for a long, long time.

Norb Vonnegut