The Late Show with Stephen Colbert (12/10/2015)
CBS
Michael Lewis On Why The Bank Bailout Was A Mistake
December 14, 2015 6:30am by Barry Ritholtz
This content, which contains security-related opinions and/or information, is provided for informational purposes only and should not be relied upon in any manner as professional advice, or an endorsement of any practices, products or services. There can be no guarantees or assurances that the views expressed here will be applicable for any particular facts or circumstances, and should not be relied upon in any manner. You should consult your own advisers as to legal, business, tax, and other related matters concerning any investment. The commentary in this “post” (including any related blog, podcasts, videos, and social media) reflects the personal opinions, viewpoints, and analyses of the Ritholtz Wealth Management employees providing such comments, and should not be regarded the views of Ritholtz Wealth Management LLC. or its respective affiliates or as a description of advisory services provided by Ritholtz Wealth Management or performance returns of any Ritholtz Wealth Management Investments client. References to any securities or digital assets, or performance data, are for illustrative purposes only and do not constitute an investment recommendation or offer to provide investment advisory services. Charts and graphs provided within are for informational purposes solely and should not be relied upon when making any investment decision. Past performance is not indicative of future results. The content speaks only as of the date indicated. Any projections, estimates, forecasts, targets, prospects, and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others. The Compound Media, Inc., an affiliate of Ritholtz Wealth Management, receives payment from various entities for advertisements in affiliated podcasts, blogs and emails. Inclusion of such advertisements does not constitute or imply endorsement, sponsorship or recommendation thereof, or any affiliation therewith, by the Content Creator or by Ritholtz Wealth Management or any of its employees. Investments in securities involve the risk of loss. For additional advertisement disclaimers see here: https://www.ritholtzwealth.com/advertising-disclaimers Please see disclosures here: https://ritholtzwealth.com/blog-disclosures/
What's been said:
Discussions found on the web:Next Post
10 Monday AM Reads
I understood the logic in 2008-9 of bailing out the big financial institutions to prevent complete meltdown. The problem I had was the view by both Administrations that the individuals in the institutions were just as sacred as the institutions. the various stupid and criminal decisions were made by people, not institutions. the flat out refusal to even investigate to see if individuals should be removed from their positions and/or prosecuted is probably the most destabilizing part of the bailout.
This apparent immunity is now leading to them lobbying for the rules to be changed even further to virtually eliminate any future potential for prosecution if another blow-up occurs. People who can take major risks in search of a massive payout with very little downside are an almost sure-fired way to lead to a bubble at some point. Socializing losses and privatizing gains is the antithesis of real capitalism.
Agreed. The public should be able to sue the executive branch to force them to prosecute.
The Obama administrations refusal to prosecute Wall Street set a bad precedent that has emboldened white collar thievery throughout society.
No segment of society should be protected from the law in a democratic society.
I partially agree. The bailouts, in some form or another, just had to be done. Ideally, we would have done the bailouts and then had tons of claw backs and criminal prosecutions.
However, I’m not so sure it would be realistic to prosecute the higher ups responsible. What exact criminal charges would we charge them with? How many CEOs actually said, “Hey! Let’s commit fraud!” Everything was veiled in risk management strategies like credit default swaps in addition to simply taking mortgage brokers word for it. Hell, remember stated income loans? How do you prosecute an executive for that? It’s the borrower that technically committed the fraud!
Yeah, they all knew this stuff was going on and looked the other way, but try to prove it beyond a reasonable doubt.
We should have broken up the banks though. We still can. My only concern here is that we would either need to coordinate with other countries or severely limit foreign banks from doing business in the United States. Otherwise, foreign banks will just displace U.S. banks.
You should read Bernanke’s book about how and why they did what they did. To call the financial programs and bank injections a bailout is too simplistic; all the money lent to the banks were collateralized by bank assets and/or for preferred stock paying high dividends. The fed guided takeover of Bear Stearns and Merill Lynch effectively wiped out the shareholders of these two firms, and AIG was also similarly punished. At the end of the day the taxpayers got a pretty good return from their “bailout”.
As far as criminal procedings, I believe they tried but proving intent versus incompetence is difficult to do. Everyone was sucked into this bubble; the buy side, the sell side, analysts, the media, regulators, etc. Perhaps they should go after the mortgage originators that doctored the loan documents more vigorously. At the end of the day greed took over everyone from the ceo’s all the way down to the schumcks that bought houses and took out home equity loans that they could not afford.
Colbert.
Used to be pithy. Now, predictable boring.
The few times I have watched Colbert on the new gig, he appears to have brought the format of the Colbert report to TLS. What worked on Comedy Central doesn’t always translate effectively to network TV.
rd is of course correct; absolutely right. However, acknowledging individual culpability would have led to individuals in small-town, moderate-sized city, and large urban centers ALSO being associated accomplices in the schemes. It was mortgage brokers in small, medium, and large business settings that fudged income statements (liar loans galore), failed to explain or point unqualified borrowers to lawyers for explication as to what they were or would be signing, et.al. Banks did what they have always done, especially the ultra-large ones, they took the paper and aggregated it and then re-sold it. Nothing new there IF the content had been properly and ethically weighed for accuracy. It would have been feasible to identify the supervisory sign-offs at whatever levels and prosecute them for malfeasance. One certain characteristic we have learned in 10,000 years of human society is that whether on the football field or boxing ring or business and commerce, humans need referees and umpires and when the kind of $ that was involved is of that magnitude, individuals have to be held accountable for the foul or in this instance, their errant behavior.
What’s funny is how time makes it all so tame now.
One word for what it really was – Treason.
Watched this then when it finished a suggestion was Steve Carell and watched that as well.
Stephen Colbert is great and basically blah, blah, blah (genuflecting in the correct direction) but Cobert would be smarter yet if he’d just leave his guests a little more space.
But then maybe that wouldn’t see as well …
No one yet – and perhaps no one ever – will match Johnny Carson.
-Plenty of people knew it was going to pop.
-Plenty of people knew, more or less, when it was going to pop.
-Ethical, fiduciary-minded, executives do NOT end up leading trillion $ organizations, PERIOD.
-In the words of Jimmy Malone, “and, THEN, what are you prepared to do?”
-It’s always been this way.
-It always will be…until right before the VERY end.