Greenspan Panders for More Money
By Frederick Sheehan
Former Federal Reserve Chairman Alan Greenspan has once again received space on the editorial pages of the Financial Times. He does not deserve, so shall not receive, a rebuttal. But, it is probably still worth a moment to remind readers of the interests he continues to serve.
His intention, in "How Dodd-Frank Fails to Meet the Test of Our Times" (March 30, 2001), is to kill the Dodd-Frank Act’s application to the banking industry. Greenspan, of course, was more circumspect, but he is not receiving the courtesy of careful interpretation here.
Greenspan still receives large fees to speak. These fees are paid by Too-Big-To-Fail banks and other tributaries of the financial juggernaut. His fees are reported to be lower these days. He used to receive $150,000 to $250,000. That is more than at least 90% of Americans will be paid during a single year of their entire lives. He is on John Paulson’s payroll, the most highly compensated hedge fund manager of our times. Bill Gross at Pimco pays him a bundle, too. He was also hired by Deutsche Bank, a relationship that has not received much attention, so he may or may not be still serving DB’s interests.
In the Financial Times, Greenspan warned that regulations in the Dodd-Frank Act would inhibit derivative markets, foreign-exchange trading (a market that exceeds $4 trillion a day), and "complex modern-day finance" that needs to be allowed to grow more complex – without interference from regulators "if we wish to maintain today’s levels of productivity and standards of living."
For money, some people will say anything. The latest reminder of how finance contributed to America’s welfare comes via [email protected], which published a 40-year study of American wages by Ron Griess (thechartstore.com). "Real" (meaning – adjusted for inflation) average hourly earnings in the U.S. were $20.86 in 1973. In February 2011: $19.33. Finance has grown from David to Goliath and sucked in money that has made billionaires of Alan Greenspan’s current employers.
Greenspan warns that U.S. banks may leave for more favorable climates. This is the best recommendation yet for the Dodd-Frank Act. Go! Last week, some European bankers threatened their regulators with the same warning. It is doubtful any country other than North Korea would take the well-connected. That might be a fine place to send them all. Gibberish will not save a central banker or Too-Big-To-Fail banker in Kim Jong-il’s paradise. Pak Nam Gi, North Korea’s Head of Finance, was executed in March 2010 for inflating the currency. He was charged with "intentionally harming the country’s economy." Two-Percent-Ben wears the charge like a bespoke suit.
Frederick Sheehan writes a blog at www.aucontrarian.com
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