The accusations and charges coming at investment banks from the government may be related to their actions during the crisis, but make no mistake, the public’s interest in these charges stems from the recovery.
With Wall Street compensation and bonuses approaching the levels of the bubble years, those who do not work in finance and are not ‘recovering’ have finally had enough.
How else to explain the sudden furor that’s boiled over only after the TARP has been repaid? Americans are not angry about the credit bubble and its aftermath, they’re angry about the aftermath of that – in which the banks are reporting intergalactic profitability while simultaneously withholding the credit availability that the zero percent interest rate was supposed to foster.
If you listen to the rhetoric from demonstrations across the country, you will hear frustration and disbelief at the ease with which the bankers have been able to emerge almost unscathed. It is this frustration over the unfairness of the recovery that has dinner tables across the country buzzing with conversations about Lloyd Blankfein and synthetic CDOs.
This week we will watch congress grill five members of the Bear Stearns all-star team that bankrupted the firm. I have no idea why. What can we possibly learn from Jimmy Cayne at this point? Bridge tournament etiquette?
This will be a pointless interrogation in which Cayne and the gang will seek to shift the narrative and make only the smallest admissions of fault so as to disarm their interlocuters with humility and self-deprecation. Americans will gain nothing from this but will be watching regardless.
The aftermath of the crisis was about getting things working again, the aftermath of the aftermath is about the fact that for bankers, things are working too well, too soon.