I read this really interesting piece by Hugo Dixon in today’s DealBook, and it made me think of two recent developments in public attitudes about the precipitators of the current global financial crisis we continue to slog through. After reading Dixon’s piece (see below), I thought first about an item one of my Editors was kind enough to share recently from World Public Opinion.org. It appears public opinions and attitudes from around the globe indicates that the public wants to see more aggressive regulatory action from the government – acting in the public interest – in confronting the perpetrators of the global economic crisis. Hmm…makes sense to me. Mexico, South Korea, Japan, Poland and Brits were among nations with the highest public attitudes believing that regulators have not gone far enough to address the economic crisis. The U.S., India, Egypt and Kenya were among nations with the largest percentage of the public believing that government regulators went too far in their actions.
Interestingly, the Titans of Wall Street have been notably bereft of a plan to repair the damage the have wrought on the economy – not to mention the families and lives trailing in its wake.
Interactive Media: The Human side of the global economic crisis
Wall Street’s only response has been to maintain the status-quo by increased funding for their powerful industry lobby; and advertising budgets that re-position them as “sympathetic” with notably emotional populist messages. Talk about wolves in sheep clothing. Andrew Ross Sorkin, also of Deal Book, wrote an excellent piece earlier this Spring titled, ‘Where’s the Plan, Wall Street..??’ You should read it.
Secondly, just yesterday China executed two business people for defrauding hundreds of investors out of more than $127 million, calling the scam a serious blow to social stability. According to reports by the Associated Press, ‘China’s highest court said the fraud had “seriously damaged the country’s financial regulatory order and social stability,” the official Xinhua news agency said.’ Hmmm . . .
NYT Deal Book, 6 Aug 2009 — It seems the Titans of Wall Street and the Lords of Finance are once again setting aside astonishingly huge sums of profits to pay lavish year-end bonuses. Bank regulators, rightly so, think there are better uses for that capital. To help regulators get their message across, Breakingviews.com has drafted the kind of letter the main international financial watchdogs ought to send to Lloyd C. Blankfein of Goldman Sachs, Robert E. Diamond Jr. of Barclays Capital, Brady W. Dougan of Credit Suisse and other heads of leading investment banks. Are these guys ‘Too big to fail, or too big to handle?‘
Dear chief executives:
Congratulations. We are writing to you to say how delighted we are that most of you have reported such good profits from investment banking in the second quarter. We are not among those who bash banks because they are doing well. As your regulators, we want you to make healthy profits so you are strong enough to weather any new shocks.
We do, however, notice that many of you have been setting aside large bonus pots for your staff. Some of you have been accruing compensation at a rate of several hundred thousand dollars per employee — and that includes the secretaries. Bonuses planned for the bigwigs are back in the millions.
You don’t need us to tell you that this is causing a political storm. Voters cannot understand how the bankers who helped cause the crisis are going to cash in just months after taxpayers rode to their rescue and when ordinary people are still suffering from rising unemployment.
Some of you will argue that you managed to squeak through the crisis without direct capital injections from the taxpayers. But we all know that without the public sector’s broader help, you would all have gone down the sink. We’ve provided a panoply of support, including guarantees for your debt. We’ve also . . . Read more from Deal Book here.
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Web Rersources:
The Cuomo Report on Wall St. Pay
Germany Prepares for Bank Nationalization
House Financial Services Cmte Wall St. ‘To-Do’ List
