12/16/2008

"Free Market" "Comeuppance"

"The powerhouse credit card company American Express has just joined the storied list of financial firms converting to bank holding companies. Like Merrill Lynch and Salomon Brothers, American Express is seeking shelter from the subprime storm by converting to the highly regulated Bank Holding Company form. In another economic climate, these voluntary conversions from the largely unregulated corporate forms that shape credit card companies and the minimally regulated and often wild, risk seeking investment bank culture would be inexplicable..."


"...There is a word for what I am feeling about American Express' flight to regulation: Schadenfreund, or comeuppance. The stress and worry that the highly-compensated executives of American Express, Morgan Stanley and Merrill Lynch are experiencing in this crisis can't be half as intense as the customers of these financial giants who were trammeled by high interest rates, risky investment strategies and huge compensation packages for executives who cooked up the products that caused us all so much financial pain. Like my mother used to say: 'what goes around, comes around.'"

Emma Coleman Jordan
Diving For Dollars and The Discount Window

3 comments:

Roadkill said...

Sunny,

And where do highly regulated finacial institutions like Fannie Mae and Freddie Mac flee when their poor management sends them into insolvency? Oh yeah, the federal government bailout process.

When do things "come around" for federally directed entities that fail as miserably as all the private outfits?

Sunny said...

How highly regulated were Mac and Mae? Doesn't appear to be very...

Aren't Mac and Mae private institutions backed by the federal government? Appears that there is now a whole bunch more institutions joining the ranks of Mac and Mae.

Did you ever get the feeling that the federal government has turned into an engorged wood tick on the back of an amoeba?

Now some of the free-marketeers are saying a little bailout is good in this type of situation. At least the socialist/liberals are the ideologically honest players in the bailout game.

Roadkill said...

Yes, Yes, Yes! The federal government is just what you describe: a parisite feeding off the wealth and productivity of its citizenry.

As I've said before, this bailout scam is the perfect situation to bring true, free market conservatives into alliance with the left wing.

I would like to think that we can agree on this, that all the bailouts (Fannie Mae, Freddie Mac, AIG, and the Big 3) are bad policy; bad for the government, bad for the taxpayers, bad for the stockholders, bad for the companies themselves, and ultimately, bad for America.