FacebookTwitterRedditEmail

Regulation or Break-Up for the Financial Sector?

In the late nineties, a prominent Japanese bank, one dating back to the mid-nineteenth century, went out of business. Its director felt obliged to come forward and express the deep shame and dishonor he felt for the venerable institution and the thousands of employees who now faced unemployment. He likely pondered what the old samurai code called for.

The contrast to the CEOs of failed American corporations is obvious and telling. Japanese executives feel an obligation to the public and their employees and have profound senses of tradition and honor. Their American counterparts only come forward under subpoena, blithely wish their employees good luck in their job hunts, and ponder the tax implications of generous severance packages. Something is wrong with American business culture, and increased regulation is far from a satisfactory solution.

Henry Ford, Andrew Carnegie, John D Rockefeller, JP Morgan, and their like were hard-nosed even ruthless businessmen who built their empires by hook or by crook. Laws were passed because of their business practices, perhaps foremost among them were anti-trust laws. But both parties have largely ignored them for several decades and we are left with many immense, badly-run, businesses – especially in the investment sector.

Though shares in the old barons’ firms were traded on exchanges (Ford long resisted this), their businesses had personal aspects. Their private income was formidable but limited by an eye to the company’s future. Most employees were paid pittances but the ratio of top-pay to bottom-pay was not nearly as immense as it is today. Failure would have hit them hard, personally and morally, as success was then tied to religious notions of salvation. The old barons were operating with their own money. They were adversely affected by bad business decisions and the golden parachute had not yet been invented, let alone opened as the firm fell precipitously. The old regime would likely find the new one to be led by arrogant, incompetent, and perhaps even sinful nabobs – the sort of irresponsible scions that novels of that era decried.

Today’s corporate elite are no longer burdened by quaint, nineteenth-century customs of responsibility and they have managed to make the old barons seem almost upright. They are freer from responsibility than any tax farmer or absentee landlord prior to a social upheaval. A return to such quaint customs is as unlikely as a return to the gold standard or a nation of small farmers.

Greater regulation is not the answer. The investment sector is too vast, the regulators too few, and public attentiveness too short. We should reexamine the wisdom of having placed billions of dollars from the Treasury Department and Federal Reserve Board into the outstretched hands of failed and failing banks, investment outfits, and insurance companies – all of whom invested other people’s money in a manner that would have horrified the likes of Ford, Carnegie, Rockefeller, and Morgan, grasping though they were.

Business leaders have shown their arrogant intransigence by awarding themselves lordly bonuses despite their manifest incompetence that has thrown the world into a depression. This should give us the opportunity to withdraw those sums that the Fed and Treasury have hastily deposited since late 2008 and transfer them into mid-size and foreign banks that are lead by more competent and less delusional figures.

Several benefits will follow from this portfolio change. It will allow for freer criminal investigations and civil suits by removing concern with reprisals from the investment sector in the form of economic manipulations during a frail recovery. It will also lead to greater competition as the recent collapse has left the investment banking sector in the hands of a few, immense companies that are unlikely to lead us out of depression, but better able to collude. Indeed they are economic hazards – and owing to a recent Supreme Court decision, political ones as well. Break-ups might also awaken members of both parties who have blithely ignored anti-trust legislation that Democrats and Republicans alike supported long ago.

A nineteenth-century writer once said that business leaders were digging their own graves, but they avoided that figurative interment. Neither he nor they could have foreseen how furiously and heedlessly their grandchildren could shovel.

BRIAN M. DOWNING is the author of several works of political and military history, including The Military Revolution and Political Change and The Paths of Glory: War and Social Change in America from the Great War to Vietnam. He can be reached at: brianmdowning@gmail.com

 

 

 

 

More articles by:

Brian M Downing is a political-military analyst, author of The Military Revolution and Political Change and The Paths of Glory: Social Change in America from the Great War to Vietnam, and co-author with Danny Rittman of  The Samson Heuristic. He can be reached at brianmdowning@gmail.com (Copyright 2015 Brian M Downing) 

bernie-the-sandernistas-cover-344x550
December 09, 2019
Jefferson Morley
Trump’s Hand-Picked Prosecutor John Durham Cleared the CIA Once, Will He Again?
Kirkpatrick Sale
Political Collapse: The Center Cannot Hold
Ishmael Reed
Bloomberg Condoned Sexual Assault by NYPD 
W. T. Whitney
Hitting at Cuban Doctors and at Human Solidarity
Louisa Willcox
The Grizzly Cost of Coexistence
Thomas Knapp
Meet Virgil Griffith: America’s Newest Political Prisoner
John Feffer
How the New Right Went Global — and How to Stop It
Ralph Nader
Why Not Also Go With “The Kitchen Table” Impeachable Offenses for Removal?
M. K. Bhadrakumar
Sri Lanka Continues Its Delicate Dance With India
Robert Fisk
Meet the Controversial Actor and Businessman Standing Up Against Egypt’s el-Sisi
Dahr Jamail
Savoring What Remains: Dealing With Climate PTSD
George Wuerthner
Bison Slaughter in Yellowstone…Again
Scott Tucker
Premature Democratic Socialists: Reasons for Hope and Change
Julian Rose
Polish Minister of Health Proposes Carcinogenic 5G Emission Levels as National Norm
Dean Baker
Coal and the Regions Left Behind
Robert Koehler
Envisioning a United World
Weekend Edition
December 06, 2019
Friday - Sunday
Jeffrey St. Clair
Eat an Impeachment
Matthew Hoh
Authorizations for Madness; The Effects and Consequences of Congress’ Endless Permissions for War
Jefferson Morley
Why the Douma Chemical Attack Wasn’t a ‘Managed Massacre’
Andrew Levine
Whatever Happened to the Obama Coalition?
Paul Street
The Dismal Dollar Dems and the Subversion of Democracy
Dave Lindorff
Conviction and Removal Aren’t the Issue; It’s Impeachment of Trump That is Essential
Ron Jacobs
Law Seminar in the Hearing Room: Impeachment Day Six
Linda Pentz Gunter
Why Do We Punish the Peacemakers?
Louis Proyect
Michael Bloomberg and Me
Robert Hunziker
Permafrost Hits a Grim Threshold
Joseph Natoli
What We Must Do
Evaggelos Vallianatos
Global Poison Spring
Robert Fantina
Is Kashmir India’s Palestine?
Charles McKelvey
A Theory of Truth From the South
Walden Bello
How the Battle of Seattle Made the Truth About Globalization True
Evan Jones
BNP Before a French Court
Norman Solomon
Kerry’s Endorsement of Biden Fits: Two Deceptive Supporters of the Iraq War
Torsten Bewernitz – Gabriel Kuhn
Syndicalism for the Twenty-First Century: From Unionism to Class-Struggle Militancy
Matthew Stevenson
Across the Balkans: From Banja Luka to Sarajevo
Thomas Knapp
NATO is a Brain Dead, Obsolete, Rabid Dog. Euthanize It.
Forrest Hylton
Bolivia’s Coup Government: a Far-Right Horror Show
M. G. Piety
A Lesson From the Danes on Immigration
Ellen Isaacs
The Audacity of Hypocrisy
Monika Zgustova
Chernobyl, Lies and Messianism in Russia
Manuel García, Jr.
From Caesar’s Last Breath to Ours
Binoy Kampmark
Going to the ICJ: Myanmar, Genocide and Aung San Suu Kyi’s Gamble
Jill Richardson
Marijuana and the Myth of the “Gateway Drug”
Muzamil Bhat
Srinagar’s Shikaras: Still Waters Run Deep Losses
Gaither Stewart
War and Betrayal: Change and Transformation
FacebookTwitterRedditEmail