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Stand Up and Face the Music

Scott Jagow Oct 16, 2008

Chris Farrell and I had a lively discussion this morning about why bank CEOs haven’t taken responsibility for their role in this financial crisis or really been part of the solution. We’ve gotten a lot of emails asking, why haven’t we heard from them?

No one’s suggesting banks should shoulder all the blame. The Fed contributed by making borrowing too easy. Borrowers contributed by being reckless. The government pitched in with both a lack of oversight and bad regulation. But at least Ben Bernanke and Hank Paulson have shown some leadership. Whether you agree with their solutions or not, at least they’ve offered them.

Bank leaders did get together last week at the New York Stock Exchange and said things like: “people like us may not lift their heads above the parapet to give ideas for fear that their heads may be shot off.” That’s Goldman Sachs CEO Lloyd Blankfein, with one of the more cowardly excuses you’ll ever hear.

Maybe bankers are trying to protect the few shareholders they have left by not saying anything. But when taxpayers are on the hook saving their institutions, a little
contriteness, a little proactivity might go a long way toward restoring faith in the industry. That could be a huge benefit when Congress starts tackling regulation.

Instead, the CEOs whine about needing more tax breaks and less regulation, and worst of all, about the need to protect their compensation. They’ve proven they didn’t deserve to be paid so well in the first place. And now their cowardly approach only shows the public that they deserve it even less.

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