Josh Marshall has a point —
This seems like just another example of perverse outcomes from the ‘worst of both worlds’ approach we’re taking to the whole finance industry bailout — keep the same people in charge of the institutions, keep effectively insolvent institutions afloat, but throw a lot of federal dollars in their direction and put in place fairly draconian tax provisions for money that’s spent in ways we find either wasteful or offensive.
Well, yes, probably. People are enraged, and their rage is focused on only a small number of those who are responsible for what’s gone wrong. Indeed, some of the people being penalized probably were not involved personally.
On the other hand, sometimes we human have to act our what we feel. This is why there are rituals, religious and otherwise. An individual may feel helpless, but if he can get together with a lot of other people to make a display of strength, he feels empowered. This is true even if the display of strength is just theater, just ritual. Right now, I think many Americans feel a need for a punishment ritual. The people who mishandled the financial sector may never see a day in prison, or in the stocks, or experience any sort of genuine deprivation. But a public shaming of somebody would at least make us feel better.
On the other hand, the public shaming shouldn’t be policy. Policy needs to be a genuine remedy, not a ritual. Whether they deserve to be punished or not, punishing the AIG bonus babies isn’t going to solve anything.
On the third hand — appearances matter. This is what Eugene Robinson wrote about today.
There has been a steady flow of news indicating that Wall Street doesn’t realize that the Era of Excess is over, the latest coming yesterday with a Bloomberg News report that the CEO of troubled Citigroup, Vikram Pandit, plans to spend about $10 million redecorating the firm’s executive offices. I know that the company has made economies and that Pandit is working for $1 a year. I just think that after accepting $45 billion in bailout money, I’d cancel any improvement project that couldn’t be accomplished with a trip to Home Depot.
It’s as if we’re dealing with a puppy who will not stop making puddles on the kitchen floor. Whenever I hear of another Wall Street exec who doesn’t “get it,” I want to whack him with a rolled up newspaper. (I wouldn’t do that to a puppy, mind you.)
Anyway, back to what Josh was saying — I agree with Charlie Cray that we should stop messing around with the bozos who caused the problem, and instead “put AIG into full receivership and break it up.” That’ll learn ’em. See also Simon Johnson and James Kwak, “Off With the Bankers,” in the New York Times.