Clueless Bankers?

Paul Krugman writes that Wall Street is "clueless", unaware of its collective evil. David Brooks writes that Haitians need a dose of the Protestant work ethic to avoid future natural man-made disasters.

Paul Krugman writes dismissively that bank CEO’s Jamie Dimon (Citi) and Lloyd Blankfein (Goldman Sachs) claim to be "clueless" about their contribution to the worst – and self-inflicted – financial crisis we have faced since 1929. He does not seem to consider that bank CEO’s in Manhattan have access to more and better legal talent than anyone outside the White House. Nor does he seem to consider that marketing and PR are a part of major league legal defenses when dealing with bet-the-company (or the global economy) problems.

Lewis Libby shoehorned himself into a charge of obstruction rather than involve his boss in major crimes. The CIA appears to have been willing to subject itself to the same limited legal risk, in destroying its taped records of interrogations, rather than expose itself and the Bush administration to charges of torture, a crime that can carry the death penalty.

In a similar way, bank CEO’s and the best lawyers on Wall Street might conclude that being "clueless" was their best public defense for having caused a global financial panic, for the knowing sale of toxic securities, and for giving themselves collective multi-billion dollar bonuses months after taxpayers bailed them out.

Mr. Krugman would also do his readers a favor if he told them that Blankfein went beyond his "clueless" defense and admitted to Congressional investigators that Goldman Sachs acted "improperly" in selling securities. That’s a big part of what Goldman does. Which means that Blankfein’s admission is tantamount to saying that the world’s top investment banker’s legal and business risk management processes are fundamentally flawed – or their advice was intentionally disregarded.

Mr. Blankfein, who once claimed to be doing "God’s work", probably had to be persuaded with a tire iron that admitting to the improper sale of securities would lead to less liability than denying it, which could only come about if investigators had hard, indisputable evidence of something worse. Mr. Krugman, however, stayed with the "clueless" claim, which is a plea that we do the same.

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Meanwhile, David Brooks tells us that the damage caused by the earthquake in Haiti is a function of the magnitude of its poverty, not its earthquake. (7.0 on the Richter scale.) After all, San Francisco suffered a comparable shock in 1989 and only 63 people died, not 50,000.

This is not a natural disaster story. This is a poverty story.

On the surface, that’s correct, but it is not an either/or proposition, as Mr. Brooks knows. What his sleight-of-word, his small turn of phrase, accomplishes is to spin a natural disaster into a "moral" one. That allows his base to fit Haiti into the same cubby hole it uses when it opposes domestic aid for the poor, especially since Haiti is overwhelmingly black. The meme is that bad things are a consequence of bad choices, not the evil acts of profit seekers or governments, or the inexplicable workings of God and her natural world.

In order to do that, he has to dismiss in two sentences the likely sources of that poverty: Continuing foreign intervention, including multiple coups, to protect foreign economic interests. That followed colonial extraction of resources, from the extermination of its indigenous people shortly after its (Hispaniola’s) "discovery" by Columbus, to the more recent deforestation of 90% of Haiti’s once verdant mountainsides.

Mr. Brooks ends with this, which suggests that he was writing from Tibet during the eight years of the Bush-induced culture of immunity for massive corruption in Washington:

It’s time to take that approach abroad, too. It’s time to find self-confident local leaders who will create No Excuses countercultures in places like Haiti, surrounding people — maybe just in a neighborhood or a school — with middle-class assumptions, an achievement ethos and tough, measurable demands.

Brooks is telling his base that Haitians could avoid their fate if they would just be more like us. In fact, their fate is partly a product of our being just like us.