Barron’s: Do the bailed-out banks owe a debt to society?
Great article in this week’s Barron’s featuring commentary from a number of distinguished market observers including our own Marshall Auerback and Baseline Scenario’s Simon Johnson (hat tip Barry Ritholtz).
The last of the big banks have repaid their TARP funds, but that won’t end the debate over their rescue and subsequent success. President Obama has jumped on the bandwagon of populist outrage at what he terms "fat-cat bankers."
Do the bailed-out banks owe a debt to society for being saved?
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Simon Johnson
Economics and management professor, MIT
"They are largely responsible for the crisis and have a moral responsibility to fix it. Not with money, but by addressing ‘too big to fail’ by becoming much smaller. To block reform and change is simply unacceptable."
Marshall Auerback
Global portfolio strategist, RAB Capital
"The banks owe a primary duty to shareholders. But it’s the government’s job to establish the incentives that determine private-sector behavior…Obama and Congress have failed to do this. Banks are an easy target, but TARP was a moronic program."
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See the full article here:
They Said What? Bankers’ Behavior – Barron’s
This overlooks the fact that private industry will never “tax” themselves to pay for an externality. That is the job of the government, which has clearly failed and is apparently determined to continue failing
Of course they won’t. And government is so captured by industry lobbyists that we will have to see much worse before we get any true reforms.