Well, certainly he didn't do anything that would reign in the lending standards that were clearly absurd. Then again, I don't know if he actually had oversight over that. Surely someone did, though, and plenty of people were shaking their heads over the past 4 or 5 years as standards became increasingly lax and absurd. And companies were assuming levels of risk assuming both that housing prices wouldn't get hit and the stock market wouldn't go down too much. Both assumptions were obviously absurd. Partly, they were assuming that their hedging would protect them, and partly they were assuming that the volume of loans they were stripping and packaging at different levels of risk would immunize them. Diversification of risk, lol. It was the same garbage in garbage out that has happened many times before, like when multinational banks lent to third world countries back in the late 70s (CEO Wriston of Citicorp said, "Countries don't go bankrupt," and they rationalized that even if one or two countries had problems, not all of them would at once, lol again), when the S&Ls overreached, when oil patch lending peaked and brought down Continental Bank in the mid 80s, with the internet craze of the 90s, etc etc etc.
But of course, we shouldn't regulate banks, and should allow them to do whatever they see fit, because after all, they are the "private sector" and they know far better than any guvment bureaucrat possibly could. And then let them go bankrupt, because that is just the cleansing action of capitalism. Let the chips fall where they fall, and let everyone all eat cake! |
