Big Bankers still don’t get it
Apparently, the closest that the Wall Street wizards can get to admitting that they made huge mistakes is saying, basically, “mistakes were made”:
The heads of major Wall Street firms admitted mistakes in leading up to the financial crisis today but didn’t take direct blame as they testified at the first public hearing of a government panel investigating the causes of the meltdown.
“There’s no doubt we as an industry made mistakes,” said John Mack, chairman of Morgan Stanley.
Goldman Sachs Chief Executive Lloyd Blankfein said large financial institutions didn’t realize the risks they were taking as they invested more heavily in the residential housing market during the real estate boom in the early 2000s. His firm and others rationalized the increasing risks of lowered credit standards, part of a “systemic lack of skepticism,” he said.
“We lent money out too cheaply and in certain loans without the traditional safeguards,” Blankfein said. “We didn’t realize early enough that risk was being mispriced.”
They were among the witnesses as the Financial Crisis Inquiry Commission began the public portion of its investigation. Also testifying were Jamie Dimon, chief executive of JPMorgan Chase, and Brian Moynihan, the new chief executive of Bank of America.
“We’re after the truth, the hard facts. . . . People are angry. They have a right to be,” Phil Angelides, the commission’s chairman, said in kicking off two days of hearings. “If we ignore history, we’re doomed to bail it out again.”
The Wall Street executives said poor government regulation also played a role in the crisis and pressed for changes, including new oversight of risk in the broader financial system and a way for large firms to fail without seriously damaging the economy. The Obama administration has proposed such changes in an overhaul of the financial regulatory system now moving through Congress.
“We cannot and should not take risk out of the system; that’s what drives the engine of our capitalist economy. But no firm should be too big to fail,” Mack said.
Dimon said he wanted to be clear he was not blaming regulators and admitted that “we did make mistakes.” JPMorgan Chase should have been more diligent about its lending standards and financial firms became over-reliant on short-term financing.
“Excessive leverage, even from consumers, pervaded the system” leading up to the crisis, Dimon said.
They still don’t get it; that’s why strict financial regulation is needed to keep them from making the same mistakes again.
Tell us what you think about the site
Customer Care »
Vacation stops, manage subscriptions and more
AJC Services
Sections
Other Editions
Guides
Visitor Agreement | Privacy Statement
© 2011 The Atlanta Journal-Constitution
32 comments Add your comment
sam
January 13th, 2010
11:07 am
until all the industry bailout is paid back (120B more to go?)..they should taxed, not Community Banks though..and there should be no waqy to pass along the tax to customers….fact is they’d be out of work right now if not for us. pay us back!
Joan
January 13th, 2010
11:15 am
It was too much regulation at the front end where the community redevelopment act forced lending institutions to lend to people who had no means to repay loans, and they were forced to issue these loans due to the government intervention, and law suits–yes, think Barry Obama who led the charge to force them to give these idiot loans, and of course, the bad debts just went up the lending tree. And, let’s not forget Barney and his boyfriend at Fannie Mae, and the payoffs that institution made to Barney and Dodd to look the other way.
Turd Ferguson
January 13th, 2010
11:17 am
The Banks only responded to the regulations and or pressures laid out to them by the Federal and State Govt. The Govt KNEW this would happen.
Dont blame the banks…blame US Congressional “machine”.
El Jefe
January 13th, 2010
11:19 am
Where has this animosity toward big business come from? Who is it that hires workers? Who is it that should provide services and goods that people need and want.
Who is it that people invest in to safeguard their retirement?
The big trading houses were too much in bed with the government, this is the outcome of the so-called public-private move in the recent years.
Business and the government should not be partners, should have the minimum of regulations and allowed to grow.
This will create more jobs and more tax revenue to the government. Attacking business will just kill the golden goose.
Vinny
January 13th, 2010
11:21 am
As usual, Cynthia doesn’t “get it”.
She just parrots liberal talking points dictated by the Obozo/Acorn Administration.
john
January 13th, 2010
11:32 am
you have no idea how capitalism works or how lending works, stick to article about world peace, racial inequality and how welfare states make for strong economies..it is very scary to think that the people that run this country have the same thought pattern as Cynthia.
Peadawg
January 13th, 2010
11:40 am
Another copy-and-paste blog, huh Cynthia? Dang you have an easy job.
Ragnar Danneskjöld
January 13th, 2010
11:45 am
Big bankers get it, for sure. Big government types will always bail out their stupid decisions, so they can bet the bank on the riskiest strategies with no downside: heads the shareholders (and highly paid CEOs win), tails the taxpayers lose. When will our politicians learn to not use taxpayer money as a piggy-bank for their favorite corporate charities? While this is primarily a sin of the leftist democrats, there are a large number of RINOs equally guilty.
Reid
January 13th, 2010
11:50 am
The bankers know now exactly what went wrong, and are acting to prevent it from happening again. They just don’t want to go into detail in public and name names.
The idea that the government pressured these helpless bankers into making fraudlent loans and loans to people who could not afford to pay back is nothing but nonsense. The govt. said make more loans, they did not say make fraudlent loans. Get real.
Chris Broe
January 13th, 2010
12:03 pm
The entire banking collapse and subsequent bailout by taxpayers had it’s beginnings in the drive-thru teller phenomenom in the 1950’s. Till then, people were forced to park their cars, and actually walk inside of a bank. Because people kept cutting in line in front of each other, riot-control protocol dictated that they invent those complex mazes that depositers had to negotiate to get to the teller windows. “Next”. Because most of the people got lost in the maze, banks had to offer bowls of lollipops to motivate learning the maze and speed things along. This Pavlovian Banking Revolution actually increased the IQ of the simpletons who used to get lost. The country was wising up fast.
But then drive-thrus took over everything and convenience itself turned the tide and now we are once again a country of financial fuddruckers.
Turd Ferguson
January 13th, 2010
12:20 pm
Reid
January 13th, 2010
11:50 am
Hogwash!
The govt said to Mr Banker…
“Mr Banker, you are a smart fellow, you enjoy your job and your bank right? Therefore we would appreciate it if you did A, B & C.”
To which Mr Banker replied…
“Yes Sir mr govt, however if we do A B & C then X Y & Z will happen and that will be a tremendous burden on this that and the other”.
To which Mr govt replied…
“Well Mr Banker that is very well thought out and lucid answer. Now if you do A, B & C as we ask the we will give to you D, E & F. If you, Mr Banker choose not to do A, B & C then we will simply SHUT YOUR DOORS!”
That is precisely how things work.
Betsy
January 13th, 2010
12:23 pm
Don’t you wonder what Cynthia Tucker’s credentials are?
Hobby
January 13th, 2010
12:33 pm
She is black and articulate. She has all the qualifications needed to be president.
Chris Broe
January 13th, 2010
12:43 pm
I can name that loon (person posting to himself) in two comments.
Jess
January 13th, 2010
12:49 pm
Notice there is no mention of Fannie and Freddie here. Also no mention that Bush tried to cool the efforts of Fannie and Freddie in 2003 but was called a racist by Barney Frank for suggesting that Freddie, who was headed by a black CEO, was acting irresponsibly. Barney and Chris were the most powerful people on the banking committee, and they were full steam ahead.
And guess who escapes all new banking regulations? Fannie and Freddie, of course.
RJ
January 13th, 2010
12:56 pm
Jane, you ignorant slut.
RJ
January 13th, 2010
1:01 pm
Cynthia, what are you doing here? Shouldn’t you and your liberal friends be down in Haiti helping your people. Would that actually require time and effort instead of sitting behind a comfy desk and complaining about Racist White People? After a week or two in Haiti, I do believe that you would come home and kiss the ground of this so called Hell Hole.
RJ
January 13th, 2010
1:12 pm
Cynthia, Let’s get a jump om tomorrow’s topic and discuss how the deaths in Haiti were caused by White People. Do you think that the starving people will complain about the food and aid coming in from Europe and the US. Won’t that be like the ‘Messiah Complex’ come true ? Should we not help them so they won’t feel inferior?
Billy Bob
January 13th, 2010
1:15 pm
Hey Usher, do you want to borrow my old pick up truck? It’s got an ALARM SYSTEM !!
MARCEL MARCEAU
January 13th, 2010
1:17 pm
,.?..,”".!!
Invisus Inauditus Impavidus
January 13th, 2010
1:26 pm
When does the public get to subpoena Congress for their part in the meltdown? I don’t mean elections, I mean under oath so they can be prosecuted when they lie.
Ponder
January 13th, 2010
1:54 pm
“We lent money out too cheaply and in certain loans without the traditional safeguards,” Blankfein said. “We didn’t realize early enough that risk was being mispriced.”…They still don’t get it; that’s why strict financial regulation is needed to keep them from making the same mistakes again.
So, who forced them to make bad loans to people who had no financial means to be home owners?? And why is this same mistake being repeated??? Thought so!!! Remember home ownership, along with other matierial items are NOT A RIGHT!!!!
Real
January 13th, 2010
2:02 pm
Cynthia – perhaps you can answer a basic premise question? Why am I responsible for the long term care and feeding of government dependent entitlement seeking parasites who, for the most part, are able-bodied and responsible for their lot in life though poor life and finanical decisions??????
Russ
January 13th, 2010
2:44 pm
The only people who knew they were making fraudulent loans were the lenders and banks. No one else knew that and therefore didn’t know there were crimes being commited that needed to be regulated.
Do some research and find out what happened instead of just blaming the government.
Frank the Tank
January 13th, 2010
3:07 pm
Don’t you knuckleheads know that it was Old Georgie Bush that cause the earthquake in Haiti?
Frank the Tank
January 13th, 2010
3:07 pm
Enter your comments here
Frank the Tank
January 13th, 2010
3:11 pm
When are people going to bre responsible for their own actions? If you want to buy on credit, then you have to abide by the lenders rules… no matter how outrageous. You do have choices. The two credit unions I belong to are in great financial shape and they don’t have all those pesky excessive fees. If you deal with the big banks, you brought all the trouble on yourselves.
Russ
January 13th, 2010
3:22 pm
The lenders that made the bad loans didn’t have any rules. That was the problem.
And the people that were borrowing the money could not qualify for lenders that had rules.
Irrational exuberance and speculation in real estate didn’t help either. All bubbles get busted. No one is left to blame excess greedy investors and speculators. Life goes on.
TnGelding
January 13th, 2010
3:32 pm
You can’t regulate against stupidity. Maybe they should be charged with perjury? Were they sworn in? Bottom line, we the people were the root cause. Why pay $300K FOR A HOUSE YOU COULD BUILD FOR $100k? All hedge funds should be forced to liquidate in an orderly manner before it happens again. If you don’t want to take the risk, “invest” in U.S. Treasuries!
Folks, if you have to charge it, you can’t afford it! It’s too bad so many of us have been forced to be frugal instead of doing it voluntarily in better times. And Obama needs to adopt austerity as his legacy goal. Even with the tremendous debt we carry it’s still not too late to right the lisping ship. But it has to begin now and it has to involve all of us, not just the “rich.”
TnGelding
January 13th, 2010
3:33 pm
Frank the Tank
January 13th, 2010
3:07 pm
Whodat?
RJ
January 13th, 2010
4:10 pm
Why we are down there rebuilding Haiti, why don’t we get them to give up that child slavery business that they have going on? Jus sayin’.
Mel
January 18th, 2010
4:22 pm
Russ, I think you’re right, very excessive!! I worked for the banks. Tax them, if they want to be that big and be protected from failure. And they will do again if the government looks the other way.