The Policymakers Saved the Financial System. And America Never Forgave Them.

Ben Bernanke, Hank Paulson and Tim Geithner rescued the country from disaster, but their success had an unexpected price.


Comments: 115

  1. Most people still think TARP was a big bailout that cost them hundreds of billions of dollars, when in fact it ended up getting back nearly everything it put out and in the end even made a small profit for the Treasury. Given the situation it addressed, it was a really successful program by any measure other than popularity. The lingering reaction to it is a testament to the publics' lack of understanding of what money is and where it comes from, how the financial system works and how it can fail, and why the system needs to be regulated to keep it on the rails so programs like TARP and all the rest aren't needed in the first place.

  2. I basically agree, but I worry that when the measure of success is "it made money", so many other important factors get left out of the anaylsis.

  3. You’re missing the point. It made money for the very people that caused the collapse . It made them whole under the premise that widespread suffering would be mitigated . Implicit in the bailout was the taxpayers and victims of Wall St greed and irresponsibility would be made whole as well. The fact is the remnants of the middle class still haven’t recovered and wealth inequality is now worse than the Gilded Age.
    Of course they made money . Hand me $10 million at ridiculously low interest rates. I’ll turn a profit .
    Bottom line -“Wall St had the party, Main St got the hangover.”

  4. The refusal of Congress, our elected representatives, to use fiscal policy to stimulate the economy should not be ignored. Congress was solely interested in ensuring their wealthy political donors were supported with zero concerns for the middle and lower economic classes. If Congress had stimulated the economy with infrastructure, environmental and education investment, the majority of citizens would be in better financial shape. Congress abandoned their tools of fiscal stimulus which hurt the majority of their constituents. Congress should not be allowed to hide by criticizing monetary policy.

  5. Your comment would be more accurate if you replaced "Congress" with "Republicans in Congress". Democrats tried to do a 2nd stimulis; Republicans voted against any stimulus.

  6. @June
    Right, because Democrats don't have any wealthy donors. Come on, Obama failed the leadership test--he didn't even try to persuade the American people to rise to the occasion and not only that, he disbanded OFA, which could have been instrumental in pushing Congresspeople to vote for a bigger stimulus. And then, somehow he let the 2010 election -- a census year no less -- be won by crazies on the extreme right. Sorry, you can't blame all of that on the stupid Republicans.

  7. "You never let a serious crisis go to waste." That quote is attributed to Rahm Emanuel, Obama's chief of staff. But rather than a rallying call for Democrats, it served as the rallying call for Republicans, who adopted a scorched earth policy to undermine any initiative that would promote economic recovery, in particular fiscal stimulus on the scale that was needed given the depth of the crisis. That meant the only path to recovery was monetary stimulus, placing on Bernanke and Geithner responsibility for saving the U.S. and world economy. Monetary stimulus worked! But it worked by relying on rising asset prices as the path to prosperity, a path that is skewed toward the wealthy because they own most of the assets. While fiscal stimulus and monetary stimulus are both redistributive, the former is redistributive downward while the latter is redistributive upward. So here we are.

  8. It was obvious at the time that Republicans refused to help people, and at best would only help financials and the wealthy. The people at the helm might have prevented an all-out depression, but they lined the pockets of the banking industry at the expense of everyone else. It was obvious then, as it is now, that Republicans, and to a lesser extent Democrats, only respond to the 'elite', the 1% so to speak.

  9. 100% correct. One gets tired of the simplistic emotionalism from left and right wing populists, crypto Marxists and utopians of various stripes. In 2008-12 policy makers were in a Catch 22 situation. To save the credit system which is the lifeblood of the US economy and had frozen up (total credit in the US economy is currently about 75 trillion versus M1 of 3.5 trillion) they had to save the banks which are the main sources of credit and that meant saving the bankers. It's also a myth that the more egregious bankers paid no price, the vast fortunes of people like Fuld were largely destroyed. Much of this credit has to be re-financed every 1 to 180 days. It was because they couldn't re-finance that Lehman, Bear, Countrywide, WAMU and all the rest of them went down or had to be merged with rescuers.

    At the end of the day these three men saved the US economy and averted a re-run of the 30's. The policies pursued by Paulsen, Bernanke and Geithner are far easier to criticize than to improve upon.

  10. @John I think you're right that the credit system had to be saved, and that Paulsen, Bernanke and Geithner did important work. But the fact that none of the people who precipitated the crisis through the bad real estate loans, bogus derivatives and the bankers who were simultaneously recommending CDOs to clients while they were shorting went to jail is the part that many of us can't accept. It may not be totally rational but it is understandable.

  11. The three people you talk of were in my mind similar to doctors doing triage without being able to plan reconstructive surgery. They had the job of alternating a tourniquet and blood transfusions without being allowed to dress the wound as soon as possible.

  12. The policymakers credited here for saving the financial system, had been telling us, for years, that a crisis would not happen because they had created all the safeguards to prevent it. Nevertheless it developed over a few days and they made everyone pay for the rescue. In all navies the captain of the ship is personnaly responsible for any accident. In all publicly owned corporations upper management is sacked if business falters; financial data must be published every three months to enforce the rules. In politics, yearly elections are held for the same purpose. Lack of responsibility is the reason why the listed policy makers were not forgiven. All along there were many qualified experts who would have "saved" the financial system the way they did while reminding that crisis has consequences for the leadership.

  13. Spot on Neil, one of your best pieces imo.

    The mainly Republican Congress and Pres. Clinton rode the car off the economic cliff in the 1990s and early 2000 naughts by letting the banking system run wild.

    You can add Bush 2 driving it the final 100 yards off the cliff.

    The coup de grace was repeal of Glass Steagall circa 1996.

    These three profiled men in your piece and the Obama team took the economic car to the repair shop and made it whole although not able to drive 100 MPH again.

    The left and right didn't like that. The conservatives wanted the car to go 100 miles an hour again and the extreme left wanted to be in the back seat enjoying the ride.

    If Trump is gone soon, and the moderate democrats and republicans take over now is the time to improve slowly what these three profiled men did.

    They can start by bringing back Glass Seagall. Even the execs. at Citi, Weill and Reed who were instrumental in repealing it now saw it was a big mistake.

  14. @Paul.....why did Hillary in 2016 campaign refuse to restore and update Glass Steagall? She said it wouldn't do any good, and cited the 'shadow banks.'
    When she got millions from speeches to Wall St banks, did she promise not to restore GS, in return for campaign donations? No wonder she refused to say what she told them. This is a Democrat---but the wife of the one who repealed it, in collusion with the GOP.

  15. Excellent article, but Mr. Irwin has a blind spot when he depicts Rick Santelli and finacial CEOs as representing different camps. They represent the same rich, corporate ruling class. Santelli was part of the right-wing propaganda machine that spreads division and hate so that the rich and powerful can gain more power and wealth.

  16. To their credit, the people involved did what they could at the time considering the limitations created by politics, but in the end, we are worse off than when we started. The financial firms that created and profited from those risks are bigger than ever, inequality is as bad and maybe even worse, and politicians are more likely than ever to work to lines the pockets of the wealthy and the corrupt. That said, some of the choices that these men made were self-serving, treating Paulson's old firm Goldman Sachs better than other firms, or making choices that favored the wealthy over others via Geitner. Much good was done, but even for the positives, bad choices were made that will be impossible to undo. The harm inflicted on debtors was and continues to be unconscionable.

  17. What people want is theater-style accountability. After all, some that were associated with the crisis were obviously dishonest. Had they stolen a packet of chewing gum they'd been locked up. And they should have been locked up for stealing those large sums of money. While the policy makers recognized this, they never explained to the masses that while criminal prosecution was warranted, the procedure was expensive and to actually convict the perpetrators was going to be very difficult. Still, a show of indignation would have gone a long way in convincing us that the policy makers genuinely cared about the general populace.
    The current crisis of distrust of 'experts' stems from that and has led to rabble rousers becoming powerful.

  18. Good history. It strongly suggests that some new deal type programs to help working people and the poor could have reduced inequality and forestalled the popular anger that followed the crisis. The GOP wouldn’t tolerate that, because Obama.

  19. The Republicans were absolutely not going to let President Obama and the Democrats have any political success from their efforts to mitigate the financial crisis. They constantly portrayed success as failure. They drove the wedge between neighbors in foreclosure and those that weren't. They trotted out economists who predicted that the US economy was going to end up like Greece. And of course they were wrong, wrong, wrong. And yet with the economy at full employment they passed tax cuts last year to increase the deficit far greater than during the Obama Administration. And they want to make them permanent, and increase the deficit more. And roll back regulations that might forestall another financial crisis. It's the Republicans who poisoned the well. And they continue to do so.

  20. @Joe Smith
    That just means that President Obama wasn't able to sell the idea to the American people. That's an enormous failure of leadership on his part--either that or he was actively colluding with the bankers. Take your pick, you can't just blame this on the Republicans as horrible as they were and are.

  21. @Joe Smith Yes, but Obama, Pelosi, Schumer, Clinton and the rest of wealthy donor-driven Democratic establishment did little to directly and effectively counter the Republican sabotage and take the argument to the people affected. It was all timid technocratic elitist Republican-lite mumbo jumbo, all so as not to upset the donor class. No leadership worthy of the name. Turn things over to the experts, don't rock the boat and hope for the best. This debacle was bipartisan.

  22. The Times is, in parallel, running an article about the millions of people who are living below the poverty line.

    If the architects of the bailout hadn't been so hell bent on funneling the recovery directly into the pockets of the wealthiest people in the world, the whole thing would have been a smashing success.

    No punitive action against those who caused the whole mess, huge consolidation of wealth. I feel like a caged parrot who's been squawking the same thing for a decade, and I'm sure a lot of people feel the same.

    I mean, this is kind of an old story by now. We know what needs to be done but have lacked the will to do it. At some point even the Fox News cohort will break towards common sense.

  23. Well, thanks to the author for reminding me that "conservative economists" like those whom he cited were wrong in 2008-09, just like they're normally wrong about everything else that they opine on.

  24. In the wake of the 2008 economic crisis, the fabulously wealthy were completely insulated from the impact of their decisions. Individual choices which brought the entire world to the precipice of economic collapse. The danger of their mistakes was socialized, while taxpayer dollars were privatized to remedy their failures.

    In return, they promptly pulled-up the ladder behind them and sacrificed the middle and working classes to further economic stagnation and decline. Demanding (and seeing) increased productivity, while stifling wages, destroying reliable full-time employment (enter the gig economy), and fighting tooth-and-nail to keep healthcare restricted to those deemed economically valuable enough for the right to live.

    American taxpayers saved the rich from themselves. In the immediate aftermath, their “gratitude” took the form of punishment. It does to this day.

    Next time, there should be no safety net for them. Let them lose it all. Everyone else they’ve left behind is already losing.

  25. @Bill
    I agree with your sentiments but letting the "fabulously wealthy...lose it all" would have put us into a 1930s style crisis, given the economic structure of the day... and that's still true. We need to incrementally change that structure -- like properly regulating Wall Street -- a task that seems politically impossible.

  26. Regulating Wall Street ?

    Elect the Democrats with a spine and it is a done deal.

  27. In reading through most of this piece I am struck how it avoids some very key points: the the role of leadership, which is not necessarily popular nor wins votes, and the greed:
    Of the financial community and the greed of the homeowner who cannot see beyond their own backyard.

    When we as a country start looking towards what is best for the country and not ONLY ourselves , we can move forward as a civilized society. Until then, chaos and the rule of the greedy mob and its’ leaders is what we get instead.

  28. Public debt was used to cover private equity loss. And much of that went overseas--as a Brookings forum noted yesterday. In effect, US became the backstop for much of Europe's debt too. Began with Clinton and Long-Term Capital Management followed by the death of Glass-Steagall--also with Clinton's signature.

  29. I was then and am now angry at the leaders you say "saved" us. Yes, they made short-term fixes that resulted in a quick recovery, but that recovery was primarily for those of us with investment portfolios who could afford to keep our portfolios in place, as The Times makes clear today here: https://www.nytimes.com/2018/09/12/business/middle-class-financial-crisi...

    As as saw it then and now, our leaders (financial and political) didn't have the nerve to address the more basic flaws in structural ways, and those flaws are still in place (and flourishing): too big to fail; legalized derivative gambling with other people's money; obscene compensation structures; near-nonexistent enforcement of securities and antitrust regulations; and failure to make top executives accountable for misdeeds and false statements.

  30. Nicely written piece that points out many things only a few know. Given the scope of the issues addressed during the crisis, of course many will be angry over something.

    I'd also, and importantly, note the Federal Reserve provided worldwide liquidity when no other entity would or could. That allowed the global banking system to work when the alternative was domino-like defaults.

  31. The Fed used the financial crisis to transfer trillions of tax dollars and lost interest on savings from the middle classes and seniors to Wall Street. Fed policy suppressed labor participation and exacerbated income inequality, while benefitting primarily the wealthy. These data have been well published in the NYT. The key question now is whether the financial system that was "saved" is dependent on continued public support. If so, then it may be unsustainable.

  32. The Fed actually contributes its profits to the Treasury and since it has nothing to do with “tax dollars” it can’t transfer them.

  33. If success is defined as preserving the financial systems and economy in the short-term, then success was achieved.

    This is not how American's defined success then or now. The financial crisis was wholly caused by the financial systems that were preserved. Those financial systems have an inappropriate amount of power and influence in our government.

    A startling majority of the country felt and still feels unease and discomfort with our financial instability and their lack of power and influence in our country's trajectory. It is expressed in different ways by the left and the right, conservative and liberal, but that discomfort finds its ways into nearly every American home.

    The same financial systems that were preserved are careening towards a devastating financial crisis on par with the Great Depression unchecked, because the most important check of all (i.e. failure) was thwarted.

    The Geithner-Paulson-Bernanke strategy failed because it succeeded at doing the wrong thing.

  34. Great writing by Neil Irwin. There are emotional responses to the events after the 2008 crash, and we see them today in some of the comments here. The emotional responses are fertile ground for populism.

    When the crash happened, many of us realized that governments had to keep the cash flowing in the world. Rather than adopt Left or Right Wing conspiracy theories, rational thinkers realized that there needed to be an effective technical response to the consequences of the crash.

    Rather than wanting to end up as impoverished conspiracy theorists, we wanted our jobs and retirement investments back. Thus, we supported the work of Ben Bernanke, Tim Geithner and the many others. Having deep knowledge of the effects of the crash in the 1930's contributed to responders' strategy, and, certainly gave a list of things *not* to do.

    If we undertook the Right or Left Wing populist views not to inject remedial funds into the economy, we'd be back in the '30's. It took ten years fraught with upheaval; what bailed us out was the War, during which we discovered the incredible productive capability of the United States, even shocking Hitler. That productive capability came from the injection of vast funds into the war effort. Many of us did not want to see our nation go through that destruction once again to get a recovery.

    In 2008 the world wasn't going to make those same, counterproductive mistakes because of the knowledge of people like Ben Bernanke and Tim Geithner.

  35. Prior to the recession, the US economy had been eliminating retirement benefits for workers (the 99%) through bankruptcy and other means, such as encouraging 401K type savings accounts. Of course these accounts declined precipitously during the recession and have taken years to rebuild to early 2000 levels. There was no "bail out" for workers losses. Only for the rich.

    Workers (the 99%) were also encouraged to purchase homes they could barely afford so that with increasing property values, would be a way to acquire retirement savings. Of course many lost there homes with job losses and losses of their savings (which I will remind you, have been at negative interest, relative to inflation) for a decade or more. Who bought up all these foreclosed homes? Workers? No, they went as packaged deals to the rich... workers now rent the houses they used to own.

    And you ask why there is resentment and anger?

  36. People understand that these are members of the mega-wealthy class that has been fleecing them for years, who contributed to the crash, who were working to preserve their own wealth rather than saving the country.

  37. Bernanke was a college professor before joining the FRB and made something like $175K as an FRB member. Geithner had been in public service as well. Paulson was rich but that doesn’t disqualify his motives. So if these three — the subject of the article — are who you a referencing you are off base.

  38. Sure, their work helped save the country during a crisis. But these guys and others like them helped create the crisis (over years) to begin with. And the people they helped most were not most of us, just mainly those at the top. That they are the principal engines of U.S. wealth today through investments, not manufacturing or on the ground business, should tell anyone what is wrong today.

  39. Within all of the criticisms I have read, I don't remember any that offered clear real life alternatives. The recovery wasn't pretty, and certainly didn't reach all those harmed in equal parts, but it did seem to ease us back from a debilitating financial and government collapse ala the Great Depression--solved in large part only by a world war. The US seemed to stay higher above water than a lot of other Western governments.
    I for one would be thrilled if those critics of the bail outs would put their heads together and offer the solution to the stagnant economy currently being endured by those of us who do not live by dividends alone.

  40. I know it sounds simplistic, but it would have helped soothe some anger if a few people---perhaps a very few---had gone to jail. As far as I remember, nobody--nobody important at least--was even prosecuted. Millions were ruined and nobody at the top seemed to be paying. That's the core of the anger.

  41. This article completely misses the point about why America never forgave them. You have to go back to the fundamental etiology of this financial crisis, which was the culmination of untold greed and criminality that three decades of financial sector deregulation under successive administrations, Republican and Democrat, allowed to proceed. This was a completely man-made crisis, in the sense that it wouldn't have happened absent the greed and criminality that took over the mortgage and derivative investment banking industries over the period. People were induced and fooled into taking on debt and buying into esoteric financial instruments that were in many cases over their heads, and certainty misrepresented. Yet throughout the Obama Administration, who from the upper and middle echelons of these industries were ever brought to book and sent to jail for the criminal deceptions they created? Next to no-one. Justice was never done and the more able shysters got away with untold billions in ill-gotten gains at the expense of the 2.8 million who lost their homes - perhaps homes many of them couldn't afford in the first place. This is where the lingering anger at what happened may be. Most people don't have the technical education to assess the rights and wrongs of the economic management policies designed to rescue the system from total collapse, but they can see massive fraud and injustice where it occurs and they can be angry that it was never confronted.

  42. I highly recommend watching PBS Independent Lens documentary, Park Avenue. It documents how the rich got richer and explains why so much of America despises these "policymakers" and their "solution."

  43. where I live, people were angry that banks were bailed out but working people lost their homes due to the banks' misdeeds; and that contracts were sacred when it came to Wall street execs' bonuses, but not when it came to union contracts with auto-makers. That's where the anger lies.

  44. Nobody likes it because we had a Democrat, a Republican and a Banking CEO working together. It left the left and right unsure who to blame and who to credit. Maybe - just maybe, working together is a good idea? Just a thought - diversity and inclusion might be good.

  45. I fantasize an alternate scenario where the government sat on its hands and followed the prescriptions of the tea party. We would still be wallowing in the tsunami of 2008 with massive unemployment and the public howling for sacrificial lambs. The only verity from all of this is that the loudest public voices are almost ALWAYS wrong.

  46. A point which I seldom seen made in reference to this is the concept of moral hazard. As it turned out, most of the firms were insulated from the most sever consequences of their bad decisions. This leads to more poor decisions in the future, as the idea is that if we win we keep the profits and if we lose the government will step in to save us.

    Forcing these firms to face up to the consequences of their actions, either in the form of loses or bankruptcy., would have had undesirable short term consequences, to be sure. But the question is, would it have deterred equally stupid moves in the future?

  47. @mikecody
    "would it have deterred equally stupid moves in the future?" as witness the water swept shores of NC, we are undeterred. As witness the Republican dismantling of Dodd-Frank. As witness the destruction of the Federal Consumer Protection Agency. As witness restoration of Federally backed education loans = $ trillion+ spent on for profit failed colleges (including Trump's own).
    My help agency had a slogan "Nobody ever called us because somebody did something smart!"

  48. a good example of devising a Pessimum, i.e., the least worst outcome, instead of striving for an unachievable Optimum.

  49. 2008 I lost my very good job and was pushed into early retirement at age 58. Father died 2 weeks later. Nobody would hire me and I became very ill. My savings were used to pay off the mortgage. Best thing I did. Lucky my condo went from ghetto to yuppie. Last year I sold for a profit and moved to a rural area so I can sit out the coming disaster. I pity my grandchildren. I did not vote for #45. Nor will I ever. Yes, I have anger. Peace be with you.

  50. It's not fun to see the fat cats get fatter while regular people lose their homes and see their 401Ks crash. Obama White House should have ensured prosecution or bankruptcy of a few symbolic fat cats. That would have appeased the people. It's simple.

  51. @Tamarine Hautmarche

    You mean send a few of the folks from Harvard and Yale to jail? I think that misunderstands the problem. Once you started down the path of prosecution you were talking about thousands of people, not a few fat cats. The crisis was a result of industrial scale fraud that involved a major portion of the finance industry. They all knew the thing was going to blow up, they just hoped to make their killing before it did.

  52. I think to blame the people who fix the 2008 financial crisis is totally miss the point. It just like that after a major house fire, the house owner did not blame the ones that started it. Instead the owners started to blame the firefighters who work hard to put it off. My anger is not at the bailout or TARP. My anger is at the bankers, brokers, and investors who gamed the system, broke it, walked away with money in their pockets, let the public and stock holders to hold the bags, and without any real consequences to themselves. If anyone know any bank executives or managers who were sent to jail for their roles in the finical crisis, please do tell. I will be happy to stand corrected and maybe less angry….

  53. The general populace and the electorate in particolar usually take out their anger on simple to understand concepts, rather than those that require intelligence, study and deep thinking to comprehend. The “easy targets” become the villains because they’re easier to identify, target, and label. Pinning the blame on them relieves one from having to consider complex theories.

    Here in Europe we have a similar situation. The poor euro is the scapegoat. Although many countries got into economic trouble, including Italy, where I have lived since 1978, and Greece, too, politicians have found it easier to blame economic problems on the adoption of the euro rather than the profligacy of governments (and many of the population, too). Voters have accepted this premise, and reward these “misleaders” with their votes.

  54. Thank you for writing this retrospective. It's not popular to say it, but these three men helped save us from another Great Depression. For all the rants about their so-called mistakes, no one would want to relive the 1930s. I'm very concerned about inequities in our economic system--but it would have been much worse if we had allowed the system to collapse.

  55. Allowing the financial system to crash would have changed the Great Recession into the Greatest Depression, it had to be rescued. The mistake was the lack of a politically feasible plan to soften the blow from the inevitable house foreclosures. Krugman and others were tearing their hair out because the deficit spending was too low to allow for a rapid recovery and reducing unemployment within a couple of years instead of almost a decade. Politics always gets in the way of sound economics and the hardest job in government is how to align the two.

  56. A boring little lecture.

    All modern developed economies are highly leveraged and much of this debt has to be regularly re-financed with runnable capital. It's their Achilles heel. It also the reason why periodically they experience crises which almost invariably arise from a mismatch between the amount of debt and the means available to repay it (aka a credit bust).

    When these crises occur policy makers are faced with a choice. They can let nature take its course and court disaster as happened in the 30's and of which Lehman's collapse provided a little taste. Alternatively they can intervene decisively and do whatever is necessary to keep the show on the road. The latter choice essentially preserves the status quo because that's what most people want since the other route can lead to societal collapse and revolution. Thus action will always be preferred over inaction.

    Lecture over.

  57. Why was there no mention of the Mitch Mcconnell statement that the entire goal of the Congress and Senate was to make Obama a one term president.

    There was certainly a bleed over from that statement - from the “financial conservatives” that bled over to the financial media market.
    Which turned into the “paying for your neighbors bathroom remodel, we need a tea party” and the entire toxic reception for any assistance for the “regular guy/gal”. Goldman Saks and the rest got off with a wrist slap, and the rest of us lost homes, savings, and our way of life.

    So, to speak of how the financial wizards missed part of the equation, with a half sentence about how they are not politicians - misses the entire problem with who politicians are, and the huge role they also played.

  58. When someone runs you over with a car but then saves your life, should you thank them for saving your life?

    Lets be clear, the "financial system" does not serve the interests of most Americans. To the contrary, it has looted American capital to build up rivals in other countries. Most of the people involved in creating the financial crisis walked away with their wealth as winners. We bailed out the losers.

  59. there were successful prosecutions pf owners/managers and the closure of many S&Ls during that crisis. What made 2008 so different there were none?
    indeed, notwithstanding whatever 'safeguards' were put in place post-crisis, (1) there is even more concentration in the banking industry; (2) ther rigor of the so-called stress tests have been questioned by many; (3) the Republican Congress has been working assiduously to undo the Dodd-Frank regulations. I have read nothing about Irwin's 'holy trinity' commenting about any of the above.

  60. As Irwin's excellent book points out, the US response was better than anywhere else in the world, and succeeded on its own terms. And the Obama stimulus was also a key piece.

    But two mistakes were made which would have heightened the popularity and success of the program: the failure to help homeowners, who were caught in a terrible web of fraud and bureaucracy; and the failure to bring any banks/investors to task (Countrywide, anyone?).

    Phil Angelides' financial crisis report uncovered many machinations which could have been prosecuted. But Republicans dissented from the report, and the Obama Administration held off on even the worst offenders. So it would have been possible to be populist and economically successful too.

    It is a tragic irony that when Wall Street failed the ultra-right Tea Party, not the left, was able to capitalize politically.

  61. The recession allowed the fat cats to perfect the art of privatizing profit while society pays for the risk. Your blinkered account of the crash is incredible to me - I can only imagine you with your fingers crossed behind your back.
    Now we can look forward to another crash with even further reduced safety nets for the hoi polloi, and even greater profit for the few, thanks to the one-party rule of the GOP. There are already homeless, deranged, drug addicted, lining the streets of most major US cities. The coast of Florida is ringed with dead animals.. What will it take to restore our nation to some sense of moral balance, to some sense of society, instead of a state intent on profit-taking and destruction?..

  62. It would be useful to put the decisions Messrs. Paulson, Bernanke and Geithner made into some kind of context. What were all of their options, and why did they choose the ones they did?

    Iceland, for example, faced a similar crisis about the same time. They handled their banking crisis quite differently, and by all reports, far more successfully.

    We Americans like to coddle our bankers and financial institutions, apparently. We could learn a lot from Iceland.

  63. @WmC
    The GDP of Iceland is about half of that of Jacksonville, Fl. That's reasonable since the population of Jacksonville is more than double the Iceland population. So, solving Iceland's problems is/was less than those faced by a middle size American city & any number of the mayors and administrators in the US face far more complicated problems than the country of Iceland.

    Bernanke, Geithner and Paulson were courageous and quite intelligent in their solutions...if only the current group in charge had the same attributes.

  64. @WmC
    My comments are not specific to this comment - but Iceland was very different - for eg. Gudrun Johnsen was on the special commission set up to learn lessons from Iceland's banking collapse.
    "The banks were 10 times the GDP of Iceland; 20 times the state budget. They were too big to bail out.
    "The stock market collapsed: 80% of the stock market was wiped out overnight. Shareholders were badly hurt. About every other business in Iceland became technically bankrupt.
    "97% of the banking sector collapsed in a matter of three days, and I hope I will not witness this anywhere in the world again.

    Fraud was rampant throughout the banking system - certainly some existed in the US and UK but not tho this extent.

  65. We didn't say, privatize gains, socialize losses for no reason. The punishment of companies that were "too big to fail", was minimal, and the prosecution of the main actors was non-existent. Was this cowardice on the part of the DOJ and SEC?

    The issue of moral hazard was raised during that time, but never really addressed. We are set up for another fall. The outrage will be the same, the politicians will make great speeches, and essentially do nothing to prevent the further systemic progression of economic inequality.

  66. Of the commenters so far, Mark from Canada says it best. The 2008 crisis occurred because of the previous 28 years of deregulation. Bill Clinton finished Ronald Reagan's work with the killing of Glass-Steagal. Now the same forces have massed to kill Dodd-Frank.

    Mr. Irwin's "Alchemists" propped up an unfair system, through which all of them rose to positions of prestige and influence, so that it could get to its next boom without sharing any of its ill-gotten gains.

    Their intentions, such as they were, pale in comparison to the plutocrat-friendly outcome they produced.

    The full reckoning is still to come. For those of us not protected by great wealth and/or influence, the prospect is frightening.

  67. The next time something like 2008-2009 occurs, the only way to assure a third occurrence is to assure that the individuals, the executives themselves, of all involved banks/corporations that caused the crisis, are the ones who are punished and sentenced severely, for causing such national and worldwide financial turmoil and devastation.
    People and politicians (I often think they are not the same) regularly blame banks/corporations, but it is the people in those companies who make the decisions. Even our beloved Supreme Court says corporations are people.
    Since no corporate charter ever advocates shameful actions or sponsors shameful policies, one cannot reasonably charge a corporation without punishing the executive first. And, legally and reasonably, no executive can hide behind its corporate charter to protect his own criminal and anti-social acts.
    But, of course, since half the population is Republican, and Republicans love corporations more than they love their children (hence the allowance of toxic water, soil, air, etc.), no corporate executives will ever be sentenced to prison time unless Democrats are in office.

  68. To their credit, the people involved did what they could at the time considering the limitations created by politics, but in the end, we are worse off than when we started. The financial firms that created and profited from those risks are bigger than ever, inequality is as bad and maybe even worse, and politicians are more likely than ever to work to lines the pockets of the wealthy and the corrupt. That said, some of the choices that these men made were self-serving, treating Paulson's old firm Goldman Sachs better than other firms, or making choices that favored the wealthy over others via Geitner. Much good was done, but even for the positives, bad choices were made that will be impossible to undo. The harm inflicted on small debtors was and continues to be damaging, and should have been unconscionable.

  69. Neil, the answer is hiding in plain sight: Despite all of the best efforts, this was still a crime without the criminals. 600 billion dollars of equity were vaporized in the 36 hours between the bankruptcy of Lehman and the takeover of AIG. Over 3 trillion dollars lost worldwide; all due to self-inflicted causes: irresponsible use of derivatives; poor oversight by the ratings agencies and the SEC (let's not even get started on Chris Cox), and poor capital requirements. Don't feel too sorry for Paulson since he successfully lobbied the SEC to ease those same capital requirements back in 2004 when he was at Goldman Sachs (only fitting that he should have to clean up the mess of his own making). It is this failure to own the problem in its entirety that is responsible for the anger that citizens rightfully should feel. That entirely includes holding senior management of offending firms responsible for reckless gambling on their watch (derivatives are nothing but poorly disguised bets). It is that failure that is largely responsible for the current political climate including the ascendency of Trump. The question is always worth asking: who do you want to dominate the market: the investors or the gamblers. The Great Recession showed us what happens when you choose the latter.

  70. Another apologist for the three biggest financial criminals in the history of civilization.

    Fraud. Moral hazard. Cluelessness. Endorsed by the author, Irwin.

  71. It's hard to feel justice was served in the form of bailouts. A number of heads should have been piked. Not one was.

  72. What utter nonsense! You forgot Bush wrecking the economy t
    hrough tax cuts for the rich and his Forever War on Terror. You forgot the huge increase in government bureaucracy with the development of Homeland Security as an industry. You forgot oil companies and speculators driving the price of oil up to $147 per barrel. You forgot the climate of fear shoved down our throats by Bush/Cheney/Rumsfeld that was exacerbated by mainsream media. Of course working people hate the elitists who brought on the Great Recession and THEN only helped out the banks! In hindsight, the bailouts were still the wrong solution.

  73. My favorite moment from 2008-09 was when enormously overpaid bankers selling derivatives whose value was unknowable got the taxpayers to give them their gigantic annual bonuses as usual when they had driven their banks into failure and caused $40 trillion in wealth to disappear. The NYTimes and others solemnly repeated the justification that these bonuses were “contractual obligations.”

  74. That no one went to jail for nearly tanking the economy, that Wall St execs still managed to keep their bonuses despite their epic failure, that the men who supposedly led the country out of the crisis showed no authentic empathy for Americans who lost everything in the collapse, and that the status quo remains the status quo shows why most Americans don't "forgive."

  75. Not one major financial institution (other than Lehman Brothers) went bankrupt. Not on high executive of any of these companies went to jail, or even lost their job or their golden parachute. Even those at AIG who caused the derivative crisis were retained and given bonus payments, so they could "solve" what they created.

    Any wonder that the public became enraged?

  76. @John Graubard: Yes John Lehman went bankrupt and the rank and file lost their jobs and vested money but Dick Fuld CEO walked away with over $ 500,000,000.00 The rest of the CEOs Blankfein Dimon, and the Wall Street Club got their bonuses, paid with TARP money, and they made a mockery of our “justice System”, not only at the Senate hearings where Blankfein gloated about doing “ Gods work” but for the following decade as they continued raking it any and using others misery to their advantage buying thousands of repossessed homes and flipping them.

  77. “It turns out, when you throw trillions of dollars at rescuing a system that most people don’t like very much in the first place, the result isn’t relief.

    It’s anger.”

    Is that a surprise?

    Bankers should have been jailed. They weren’t. They were bailed out and everyone else had to go fish.

    Why weren’t the banks nationalized like GM was? Why didn’t the stockholders and the bondholders take a haircut? Why were fraudulent foreclosures allowed? Why aren’t Wells Fargo and all these other nasty criminal enterprises closed after their record of fraud, theft, and lies? Why is it somehow a mystery that people are angry?

    And then after bailing out the banks, by “throw[ing] trillions of dollars at them,” Obama says we need to cut Social Security and Medicare because we just can’t afford them.

    Yes, we’re angry.

  78. Considering that the vast majority of Americans have no direct financial holdings more than a checking or savings account the rage at the infamous “Bailout” was, and is, huge. As with most problems we blissfully forget how it all began. I remember seeing a YouTube video back in the day where a comedian posing as a banker made the case for a colossal financial mistake because: “the larger it is the more likely that we’ll get bailed out.

    We forget that the Dot-Com bust resulted in a lot of cash for those who sold out at the peak to people who bought-high and sold-low. Suddenly mortgage re-financing was all the rage, as was flipping houses and many American simply could not resist and many used the re-financing to pay off massive medical bills with the prospect that real estate only grows in value. We forget that Congress intimidated the folks at “Fannie” and “Freddie” to start buying the bundles of mortgages even if they didn’t meet their basic criteria. And then it all came tumbling down. Like the YouTube video, the crisis was so huge that governments had no choice but to bail out the banks. Unfortunately, none of the bankers ever went to jail.

    Yeah people are still angry because they lost their homes, jobs, pensions,… and they haven’t forgotten the pain, just who caused it an on who’s watch it happened. Now it’s Obama and the “Dems” who are blamed. So terribly human, so predictably human.

  79. Sometimes honest men must go to jail for justice to be served. It's not right, it just is.

  80. If you actually want to understand the subprime mortgage crisis read "House of Debt" by Mian and Sufi.

  81. Your narrative throughout this opinion piece is how successful the policies of Bernanke, Geithner and Paulson were, hundreds of millions of Americans and Europeans would vehemently disagree, even august economists such as Martin Wolf from the right and Robert Reich and Noam Chomsky from the left agree the approach by the big three was little more than a “make them whole” again approach for Wall Street while throwing the rest of the developed worlds middle class into a ditch and then allowing the truck of globalization to run them over. Personally I am tired of flacks attempting to whitewash and remake the actions and the individuals themselves who hoisted this mess on the rest of us, the primary actors at Goldman, Citi, Lehman and Bear not to mention Countrywide and the rest were bad guys who got away with the biggest theft of public money in history and they are laughing all the way to the bank. The only prescient observation in this article is that populism and a shift away from the center as well as anti semitisism, anti immigrant anti establishment politics are here to stay until there is a day of reckoning. You can fantasize all you want about it “ could have been so much worse” to quote Dr. Krugman but for the hundreds of millions of Americans and Europeans who were sacrificed to the twin Gods of Wall Street and globalization their forced acceptance of now being among the lower classes cannot be glossed over nor forgiven, nor forgotten. Get used to it.

  82. Mr. Irwin,

    I was especially pleased by your inclusion of the names of all those bankers who were investigated by the Justice Department for their criminally negligent and self-serving profitable (for them) behavior. Keep up the good work.

  83. Irwin completely misses the point. The reason the public remembers the financial crisis with raging anger is because it was caused by individuals and institutions that intended to steal billions (really trillions) of dollars from honest working people. And guess what - they got away with it and NO ONE WAS HELD ACCOUNTABLE. Paulson and company were only protecting themselves, their friends and family on Wall Street.They are insiders. The top three management levels of all 17 banks should have been prosecuted and subject to the consequences listed below.
    To prevent this horrific theft from occurring again:
    1. Those responsible should have been fined using the current law of TREBLE DAMAGES - if you steal 1 billion dollars you pay back 3 billion.
    2. Jail time should be "hard labor" for 1-10 years, no CLUB FED. Perhaps the bankers will learn what honest people call work.
    3. Replace the corrupt SEC with an effective financial fraud unit.
    4. Create an aggressive international fraud police force with all other countries to seize assets and holdings in overseas banks and bring financial swindlers to justice.
    5. All cases (national and international) should be settled in six months or less eliminating the current legal strategy of dragging them out for decades to the advantage of lawyers and the Wall Street culprits.
    These measures, along with others will at least send a strong message to Wall Street - be careful about how much you steal.

  84. It’s fair to recognize how the Fed and Treasury acted to restore confidence in the American economy. But “conserving” a financial industry that had run amok has encouraged even more risk-taking for private benefit, with the expectation that when the results of overreaching greed next hit the fan, losses will be socialized. OF COURSE the politicians beholden to the donor class will continue to weaken regulation so their patrons can skim the cream and leave the rest of us with adulterated skim milk.

    The Obama Administration failed the American people in two huge ways that have eroded trust in government. By failing to prosecute and imprison the many people responsible for the crash, the government effectively pardoned them for looting the economy. Why would we expect accountability in the future? Second, the program to help homeowners with distressed mortgages was handed over to the same banks that had preyed on these people in the first place. The result was massive bad faith implementation, seeking a quick buck while pushing homeowners into foreclosure instead of refinancing the risky loans banks sold them.

    Congressional Republicans alone, in their nihilistic zeal to thwart everything Obama tried, are to blame for the failure to enact adequate fiscal stimulus to help ordinary Americans. Given that cowardice, the Fed’s monetary measures were heroic.

    Future historians will rightly wonder how we came to learn practically nothing from this disaster.

  85. Good grief, read your own press. In "The Recovery Threw the Middle-Class Dream Under a Benz" also published today in the NYT, Nelson D. Schwartz writes, "Banks were hurt, too, but aside from the collapse of Lehman Brothers, the pain proved transitory. Bankers themselves were never punished for their sins. In one form or another — the Troubled Asset Relief Program, quantitative easing, the Fed’s discount window — the financial sector was supported in spectacular fashion."

  86. Oddly, Rick Santelli, wasn't hurt as nearly as much as the thousands of people who actually lost their homes to foreclosure. Sticking to the higher free market principles sounds like crazy talk now more than in 2009. We were angry then. Angry before Obama took office. Still angry now in 2018.

    Looking back, we kept the financial system, Santelli prospered, and we avoided soup lines and Hoovervilles.

  87. All three of these men mistakenly believed that the institutional beneficiaries of their actions would reciprocate to the American taxpayer --- Peterson was astonished that the banks squeezed lending after their bailout. Geitner and Bernake were probably perplexed that these same beneficiaries were offended by Obama's mild rebuke of the financial industry. Remember Lloyd Blankfein taking umbrage?
    Those responsible were not only saved and not shamed (or prosecuted) but were brazenly aggressive in their offense against subsequent regulation and remarkably unreflective and unapologetic.
    And then there is Wells Fargo......

  88. Ten years ago, I certainly saw America preparing to go over a cliff. This would not have been a clearing away of weak businesses, but a disaster to one and all. And yes, these people turned us aside from that cliff. And yes, many still attach a lot of blame to them. But some of the blame was deserved. Bad things were done that were not necessary for salvation.

  89. I recall the first inkling I had that the most recent presidential election might go south for the Democrats was when NPR interviewed a woman on Long Island in the summer of 2016 who had lost her home because she had been unable to pay the mortgage. She blamed Obama. Santelli's rant came to mind, and I thought, "My God, the same Tea Partiers that didn't want a proper mortgage bailout were now going to turn around and blame Democrats for something the Republicans could have helped prevent, but didn't- amazing!". The cynicism and swifboating/gaslighting of the right knows no bounds, and here we are, reaping the whirlwind.

  90. Instead they should have allowed the large financial institutions to be nationalized temporarily while they are broken up such that this kind of TBTF criminality could not happen again.

    These institutions contribute nothing of value, and should be moved to Las Vegas where gambling is legal.

    And what about all the homes that were lost and mortgages that went underwater? Obama was going to provide help, but was seemingly talked out of it by these guys.

  91. Saving the 'financial system' is why a much greater price than withholding forgiveness must be paid by the friends of the billionaires and the propaganda orgs they utilize to spread lying themes about the political economy. Steinbeck's Joad family did not know who to blame for the financial crisis that cost them their farm, but 21st century Americans do know who caused the market failure of 2008 that cost them their homes and jobs, and know who the public servants were that betrayed them. American voters should act on their knowledge, and match their revenge with the greed of the ruling class.

  92. If only the people who worked for these companies had a little more humility about the wealth they were able to create for themselves, and keep while everyone around them lost financial ground. It was particularly hard to listen to those who ended up with 2 years of severance pay AND extended unemployment insurance AND free placement counseling AND found great jobs complain about Obamacare.

  93. An interesting question would be what Treasury and the Fed think they should’ve done differently *before* the crisis.

  94. The TARP money should not have been allowed to be used to pay bonuses to the financial execs.

  95. The Home Owners' Loan Corporation (HOLC) as part of FDR's New Deal helped many homeowners in the 1930's.
    Such a program should have been adopted during the 2008 crisis.
    Why were these three ONLY concerned with saving the banks.
    The banks AND the homeowners could have been helped.
    The two are not mutually exclusive.

  96. Americans have a right to be angry with the establishment, especially when the essay closes with the trite statement that average individual income is restored after eight years. Haven't the reports been that income has fallen since 2000? That statement should be reconciled with the reports that wage income has been stagnating for thirty years that have included the 1970s deindustrialization, the 1980s savings and loan crisis and farmer's crisis, the 1990s two-tier and union busting. The slogan, Eat the Rich, needs to come back. How much more will Americans will take?

  97. type The banks were allowed to increase their reserves by borrowing from the FED, this prevented runs on the banks, and also kept the credit system from freezing up. The banks paid 8% on that money, which made a profit for the FED, this is what conservatives and the TP bunch called a bailout.
    Lehman Brothers and Bear Sterns did have runs on them, the commercial accounts recalled their accounts, they were not members of the FED and not eligible for FED loans.

    No bank how good it is can stand a run, there is never enough money to give back to depositors without calling in all loans. Geithner, Paulosn and Bernanke saved the country from a 1929 type meltdown, but as usual the GOP has an agenda of lies to discredit anything done by others. The Angelides Commission Report has all the facts, and even there Republicans dispute the facts.

    As for the homeowners, many of them tried to game the system, buying homes with loans they could not afford. They allowed themselves to be convinced values would go up so fast, they would come out ahead. The first ones in did, the later ones paid the price.

    Those collateralized debts were could only be bought by institutions or other banks. There was a waning, Brooksly Born who warned about the unregulated market was forced out of Bush's advisors council by Greenspan.

    http://www.washingtonpost.com/wp-dyn/content/article/2010/10/20/AR201010...

  98. I'm not as economically astute as many commenters here, but I agree with an earlier commenter's analogy about surgeons in triage mode not able to devise reconstructive surgery at the same time.

    The world's interlinked monetary systems were dangerously near collapse and I am thankful for the reprieve. We underestimate at our peril what a complex web keeps the whole planet afloat. What I can't understand is why all these revenge fantasies don't morph into rejection of huge tax cuts that further enrich the 1%. That's the way to extract revenge.

  99. The government's financial policy makers at the time, who came primarily from banking and financial industry backgrounds, bailed out the banks and financial industry. Not a surprise, really. That this may have been a less successful way to mitigate the Great Recession (particularly when combined with the subsequent Republican Congress's unwillingness to do anything through fiscal policy) should also come as no surprise. The great revolving door spins, and those who make the policy go on to reap rewards from the banks and industry they save... while millions of homeowners have their homes foreclosed and their financial futures gutted. Now we have Trump, who promises to MAGA - the question every working-class or middle-class person should be asking is "Great for who?" Anyone with doubts as to how this will play out can look at the Great Recession's history for a clue. Trump will unhesitatingly take care of Trump first, last, and always. His economic policy will protect Trump's peers, and leave the rest of us grasping at straws, and hollow gifts. A great tax cut... that expires. Deficits that balloon, and don't end. Financial deregulation that sets up the next financial crash, puts us on track for another bailout, and makes it easier for payday loan firms and other grifters to take advantage of those least able to protect themselves, while gutting the Consumer Financial Protection Bureau. We have learned nothing, and are doomed to repeat the mistakes of the past again.

  100. It is not enough to fix a disaster. One also must i) punish those who caused it and ii) make sure that it does not happen again. Of course, i) and ii) are closely related - without culprits paying the price for their misdeeds no true prevention is possible. None of that was done, nor was any explanation given as to why was it not done.

  101. @David: "...nor was any explanation given as to why was it not done." I've posted a longer comment on this elsewhere in this thread. Explanations *have* been offered; the NYT Magazine compiled some of them here: "Why Only One Top Banker Went to Jail for the Financial Crisis," https://www.nytimes.com/2014/05/04/magazine/only-one-top-banker-jail-fin....

    Which is not to say that the explanations make me feel any better about it!

  102. I'm sorry but I don't buy it. No, the U.S. isn't in the depths of the 1930's depression but that's cold comfort to tens of millions who were in their prime productive years in 2008 when they lost big, never fully recovering even now (and too old to start again). Don't know if any other reader responds with this or not but the "tell" immediately after Obama came in (and I voted for him and think he was/is great) was Pelosi as Speaker explicitly saying that prosecuting the banks was "not on the table".
    I'm sorry, but ALL of these folks who were and are financially secure (including the media leaders) haven't a clue. Or maybe they do and advancing the status quo is and always has been part of that agenda. I truly hope there are tens of millions of well-educated folks out there who can turn this game around in the coming few years.

  103. @paperfan: Regarding the failure to prosecute the banks, my original gut reaction was like yours, to consider this a serious failure of the Obama administration and the democratic congress at the time of his election. However, the NYT Magazine published a long article in 2014 looking back on attempted prosecutions and prosecutorial decisions, that made me rethink this (see "Why Only One Top Banker Went to Jail for the Financial Crisis," https://www.nytimes.com/2014/05/04/magazine/only-one-top-banker-jail-fin.... It's worth a read. Briefly, two main factors at play were, (1) the financial industry had protected itself with regulations put in place in the Clinton & Bush administrations that limited liability, making successful prosecution unlikely in many cases; and (2) the "too big to fail" issue regarding prosecutions that could jeopardize some institutions. It seems to me the blame may not lie with those in charge of prosecution authority post-crisis, but rather with lawmakers of earlier times who pandered to the whims of finance industry lobbyists.

    And now the current "conservatives" in power want to *de*regulate the financial industry further, and pack the supreme court with Citizens United-friendly justices. Maybe they should read some George Santayana.

  104. According to a team at Bloomberg News in 2010, at one point in 2009 the U.S. had lent, spent or guaranteed as much as $12.8 trillion to rescue the economy. (http://www.pbs.org/wnet/need-to-know/economy/the-true-cost-of-the-bank-b... The cost was higher than that. A large percentage of the 21 million workers who lost their jobs at that time never returned to work, decimating the middle class. Eventually they dropped out of government statistical bases like the unemployment index and disappeared from sight for all practical purposes.

    I still think if that $700 billion TARP bailout had been distributed from the bottom up - or at least the middle up - we would have a stronger economy today. Weak banks would have failed and large banks would have taken a well-deserved and earned hit for their SWAP file practices. Money distributed through the middle class would have "trickled up" because that's what money does eventually, but it would have first circulated through the consumer economy and provided the "green energy" money provides as it moved up. Instead, Paulson and the others handed the dough directly to their brethern, saved their butts and savaged ours. Now we get these rationales that what they did in panic was really the best they could do. I am not convinced.

    Angry? Yes, I'm still angry.

  105. Sure they could have done better and perhaps will the next time in the same way the lessons of the Great Depression colored their response. On the other hand, they could have done a lot worse,as the European response suggests. In times of political and crisis, doing the best thing is never an option. Rather the goal becomes doing the least worst or more possible. They came pretty close in achieving those.

  106. The fact that they "got the economics mostly correct", only they broke Capitalism and undermined Western Liberal Democracy itself in the process, tells you all you need to know.

    After going to great lengths to exonerate these men, the author finally finds his way to the bottom line at the very end.

    A handful of dinosaurs who were oblivious to the economic transformation that has been underway for decades restored a fundamentally broken system that had just been rather emphatically repudiated by the free market they all claimed to worship, because it was all they knew. They applied 20th century solutions to 21st century problems, restored a status quo that deserved to be destroyed, and prevented capitalism's cleansing process of creative destruction from doing just that.

    This country, indeed the world, may never recover from their monumental blunders.

    And ten years later the pundits and economists still have absolutely no clue.

  107. Their error was not in saving the financial system... their error was in allowing it to become so dangerous. That was unforgivable.

  108. One, there were no 'masterminds' that took the economy to the brink. There were just a bunch of guys (and Wall St. is still mostly guys) who thought they were the smartest guys in the room. No criminal or civil indictments, frustrating though that is - and as Geithner stated in his interview with ARSorkin earlier today. Dick Fuld got some comeuppance -but not much.

    Two, they (the big three) probably did as well as they could given the political climate at the time. Both parties had roles to play - the housing bubble took years to reach its crescendo - but the Republicans took and deserved most of the blame.

    Third, Santelli's rant, entertaining though it was, has led to the Tea Party which has been strangely silent during the Trump tax cuts and the 1.5 trillion deficit expected over the next ten years. Where did they go? And where is the party with the fiscal discipline. It's no longer Republican in name.

    Fourth, I'm now a member of the 'investor class,' ie, retired. I have gained mightily for 40 years. But the diminution of the middle class is not sustainable. My moderately 'social liberal/fiscal conservative' is no longer 'a thing'. I/we have been left behind....to bask nicely as 1%ers. Oh, and thank God for the big three. They saved our collective bacon despite the continuing backlash they receive.

  109. Why would most people not be appreciative?
    Compare the 2008 response to the response to the Great Depression (which also saved capitalism from itself). Then, decades of massive inequality due to financialization (1880s- 1920’s) were met with massive equalization (1930s-1970s) This time, our “saviors” have exacerbated the second Gilded Age
    (1980’s to 2000’s): Saez shows that the recovery ‘08-‘15 or ‘16 went overwhelmingly to the top 10%.

    And this was paid for by raising public debt GDP ratios to post- WWII highs ...at the top of the business cycle.

    We might forgive the 90% for keeping their pitchforks sharp.

  110. They saved and protected a dysfunctional and failing banking system. The last two years under Trump administration have seen the rollback of several safety measures put in place to try and prevent the next crisis which all started under the Clinton administration of weakening financial regulation. The SEC is still essentially a toothless tiger when it comes to systemic abuses and essentially the rest of the world who had invested so heavily in the US is not going to make the same mistake twice. So the next crisis is America doing it on its own and will be akin to the losses the UK felt a century ago when it was the leading superpower.

    These guys didn't save a nation when it comes to be prepared the nation and reducing the weaknesses in monolithic financial institutions who are "too big to fail" nor was there any downside or consequence to the people running those organisations as society saw the system of law apply differently to them then it would to others. No bankers were even tried let alone jailed. None had their past profits stripped nor were they able to be sued or barred from managing money accounts for federal and state pension funds. Abusers like HSBC have been allowed back in like nothing happened. There is nothing commendable about maintaining the status quo, especially when it is so broken.

    Almost everyone agrees we shouldn't rescue failed business industries or industries using a failing business model, yet these three gentlemen did exactly that.

  111. They kicked the can down the road while bailing out their kind at the expense of everyone else. They've doubled the debt and run out of ink to print more money all eventually to be paid for by us the middle class who always gets it in the neck.

  112. One mistake here is the idea that helping a borrower continue to pay his bank $400k for a house now worth $150k is actual assistance to ordinary people. It's not--it's assistance to the bank. The borrower would be better off finding an affordable rental and defaulting on the loan. An entire block of "homeowners" (who are actually already renting from the bank via an interest-only loan) could default and then move next door and rent from the bank (or from some investor who bought it cheap) for half as much or less. The loser in that case would of course be the bank, or whoever owned the loan through MBS at time of default.
    I have trouble believing Mr. Santelli was actually stupid enough not to see this--it should be obvious to anyone with any involvement in real estate finance. He just found it more convenient to smear the fools who didn't figure it out themselves. If they had simply stopped paying on those underwater mortgages, all those rabid bond-traders would have had a lot more to be mad about, and only themselves to blame for investing in a bubble. Instead they complain about government aid as if it's not them that's the welfare bum.

  113. The rich had already succeeded in pulling the wool over people’s eyes with the Iraq War Against Imaginary Nukes.

    That emboldened them, so at the end of puppet GWB’s Regime, they crashed the economy.

    This gave them the chance to suck up even more wealth, and leave the bill with taxpayers — if they could find them, that is, after kicking them out of “their” homes.

    Then, they threw all the real estate they’d used people’s savings and credit history to build at the banks, to purchase for pennies on the dollar, and then rent to the same families they’d just dispossessed.

    Do you know that more than 70% of new real estate purchases — of new or existing homes — are now made by the rich, through banks, as juicy REIT profit centers?

    Meanwhile, while jacking up real estate prices this way and disenfranchising the nation of home ownership, the colleges and universities skyrocketed educational costs, complaining that high real estate prices are responsible. Thus assuring the disenfranchisement in multiple ways of generations to come.

    And then, Neil Irwin and the NYT get all chirpy about how great the employment numbers are for 24-40 year old white males, forgetting about the rest of us.

    America! Ain’t it Great?! Blame Russia, if you need a scapegoat. Or women, blacks, immigrants, old people, Latinos or Asians, if Russia isn’t doing it for you.

    But certainly not the real peeps! They’re doing just fine!

  114. This column is apposite in reminding us that the "populist" backlash to a global economic crisis is something we've seen before. While other commenters have focused on the economics of the event, the column is primarily about the politics and it raises a fundamental question about American politics now.

    The populist backlash to the Great Depression in Europe is well understood but - unless you want to argue about timing - the popular movement that emerged in the United States was embodied in the New Deal. When the Depression gave the United States and the world FDR, how come the GFC gave us Trump?

    One answer might be that there was no domestic enemy for a fascistic force to focus on in Thirties America - or maybe they tried but it just didn't take. What I believe is significant is the decency of the average American. Most Americans in the Thirties wanted to give a guy a break. In Trump's America, the base want to keep their neighbour poor or kick them out into the street.

    I suggest that it's obvious the United States - and the rest of the Western World - need a New New Deal. I haven't done the research, but the economic trend identified by Veblen before the Depression was "Conspicuous Consumption" - which might be another term to describe extreme inequality of wealth - nowhere more perfectly embodied than in Trump.

    Americans need to give their struggling neighbours an even break. Enough already with the "populist" stuff. Try this slogan: "Make America Decent Again!"