When I worked in the Financial District back in the nineties, the big-shot investment types loved to talk about accountability. Almost all male, they loved macho posturing. They got big money because they took big risks, they'd say. They were the Danger Boys. They had to lay it all on the line every day.
But if there's one thing we've learned in the past couple of years, it's that Wall Street lives in a No-Accountability Culture. It's No Risk, All Reward. Case in point: Washington's compulsion for compromise led it to adopt a weak bill to help the millions of people left without jobs as a result of Wall Street's recklessness. Bill Scher calls the bill "tiny," and that's the right word. In fact, it's so tiny it's homeopathic. It only makes sense if you believe that microscopic amounts of medicine can cure big diseases.
But if the jobs bill is small, Wall Street bonuses sure aren't. How's this for perspective? The Senate bill provides $15 billion to help the nation's unemployed, but the Wall Street bankers we all rescued got $20 billion in bonuses last year. That means that 29 million unemployed Americans will receive less financial support in total than was given out in bonuses to about 165,000 Wall Street employees (and most of that went to the guys at the top).
Many of those unemployed Americans helped bail out the financial sector with the taxes they paid before being thrown out of work. But the bankers who shattered their lives -- and who would have gone down in flames without taxpayer help -- are getting more money for goodies than all those millions will get just to survive.
If you don't feel like a sucker yet, you're probably not paying attention.
The Culture of No-Accountability seems to have spread to Washington, too. As of this writing, one Senator (Jim Bunning-KY) is blocking that little jobs bill. That means that people thrown out of work by Bunning's Wall Street pals might find themselves unable to buy groceries. Oh, and doctors could receive a 21% pay cut, too.
Prediction: There will be no censure of Jim Bunning. There will be no substantial criticism from members of his own party. "Bipartisanship" and "compromise" will remain the watchwords. That's non-accountability for ya.
Another way to promote the Culture of No Accountability is by using "compromise" as an excuse to dilute the authority of regulators, so that nobody can really be blamed when things go wrong. That's the main problem with Sen. Dodd's proposed approach to banking regulation.
Consumer groups aren't happy with the Dodd Compromise, and no wonder: It abandons the idea of a separate agency to protect consumers, leaving that function in the hands of the same regulators who permitted our recent catastrophe to take place. The byzantine, wilderness-of-mirrors structure of the compromise serves the Culture of No Accountability well. It diffuses authority and responsibility, leaving nobody in particular in charge of looking out for consumers' interests. Paul Krugman says it would be better to have no bill at all than to settle for this one.
But if consumer groups don't like this compromise, the bankers love it. It's not just that the proposal would leave them in the friendly hands of Tim Geithner, rather than exposing them to the possibility that they might have to answer to Elizabeth Warren or someone else who's more consumer-friendly and less banker-compliant. (Under the Dodd compromise the Treasury Secretary gets to veto any consumer-protection actions.)
Bankers would be pleased to leave their fates in the hands of Geithner, a person who appears to share their Comfort Zone of insider collegiality. But that's not the only reason they'd be happy with this compromise. As Edmund L. Andrews explains: "In practice, Treasury under both Republican and Democratic control has been extremely sympathetic to banks throughout this crisis." That's the point: The best way to weaken consumer protection is by subordinating it to a bank-friendly institution. As Andrews observes, "If the banks think this is worth a pitched battle, then you can bet this isn't about angels on the head of a pin."
This is no time to go weak at the knees about financial regulation. Credit card companies are already gaming the new rules they've been given. As Barry Ritholtz observes, the bank system remains "in perilous health" (he quotes this statistic from a New York Times article: "More than $1 in every $10 that American banks have outstanding in loans is lent to a troubled borrower.") Yet, even in these dangerous times, the urge to appear "bipartisan" appears to outweigh the need for decisive and effective action.
Sen. Dodd is clearly feeling the heat. A Dodd spokesperson contacted the Huffington Post with this reaction to some negative coverage: " "Dodd has always been committed to strong consumer protections. He has demonstrated that fact throughout these negotiations. He wants a consensus bill, but first and foremost he wants a good bill that doesn't leave Americans subject to the same sort of abuses from Wall Street that we've seen."
That's a good sign that the pressure is working. It should be kept up and intensified. We need strong regulation and clear lines of authority that protect the American public. We need to begin a national dialog about credit default swaps and other complex and risky financial instruments. We need CEO responsibility and straight talk of the kind that Warren Buffett recommends.
Most of all, we need to put an end to the Culture of No Accountability, in New York and Washington.
(UPDATE: Forgot that "Accountability Now" is the name of the initiative Jane Hamsher and Glenn Greenwald started to hold Dems accountable to the base for their actions. As you might imagine, I like that name.)
Richard (RJ) Eskow, a consultant and writer, is a Senior Fellow with the Campaign for America's Future. This post was produced as part of the Curbing Wall Street project. Richard blogs at:
Website: Eskow and Associates