Wall Street Banks: Too Big To Discipline?


In 2009 the leading issue of moral hazard was “too big to fail.” Not surprisingly, the more things change, the more they stay the same. As the congressional bank hearings of 2010 unfold, the new touchstone of moral hazard is “too big to discipline.” The heads of Morgan Stanley, J.P Morgan and Bank of America argue that they cannot be reproved in practice or disciplined by being broken up because their gargantuan size is necessary for the health of American banking in a global environment. ‘Make us pay, and you’ll pay,’ is their mantra!

Here’s how it works: Morgan Stanley’s Mack says the bank wants special “leeway” to protect itself if it has to put more skin in the game, otherwise the bank might choke on its own cooking. Goldman Sach’s Blankfein — the Lord’s self-proclaimed helper — observes that the marketing of dangerous mortgage securities helped reduce the bank’s risk (of holding those securities after creating them). J.P Morgan’s Dimon implies that it was regulators’ fault that they were duped by banking lobbyists, for “that is what democracy is about.”

Of all the claims made by these executive miscreants, none is more egregious than the ‘we’re just doing business as normal’ claim by J.P. Morgan’s Dimon. What is Dimon talking about? He is speaking of Wall Street’s intention to pass along to the American public most of the fees and taxes that the Obama administration hopes to levy upon it to help pay for more entitlement programs.

Wall Street will convert any attempt to discipline it into another hidden tax upon the longsuffering American public. Every corporation will bear that tax in the price of Wall Street services, resulting in Americans paying more for the products Main Street corporations produce. This is the “too big to discipline” calamity. Another perfect storm. It is hovering over us and blowing its foul breath down upon us like an awful beast. What will be our reward if we weather the attack? More government growth sustained by yet more taxes that are not well fought because they become well concealed.

America already frittered away our best chance to escape this beast. When the crisis flared in 2008, the beast should have been defanged and declawed by legislation sending the bailout billions as fresh banking capital to firms like Hewlett Packard, FedEx 3M, John Deere, Parker Hannifin, Caterpillar, and other Main Street American firms with competent and financially responsible management teams. If Federal Reserve Board loyalties had been to the American people rather than a reprobate financial elite, the Fed could have used its power to smooth a transition of ownership and management at the top of the banking industry. This, however, is exactly what the Fed was determined to prevent. From the Fed’s perspective, the groups gaining a stranglehold over the American society had to be kept in power. Our reward is Wall Street CEOs warning members of Congress to tread lightly in chastening their banks.

If the big banks get to pass off their punishments onto the taxpaying public, then the Obama approach is mistaken. The administration needs to rethink its plan! There is only one way to take away these bankers’ bonuses and that is to take away their banks! Why can’t the Congress and the electorate see this simple reality?

What the New York banking elite ought to fear is the words of Jesus the teacher applied to their failed stewardship: “Therefore I say to you, the kingdom of God will be taken from you, and be given to a nation producing the fruit of it” (Matthew 21:43, NASV). The rallying cry of thinking Americans ought to be: “Take the banking industry from those Wall Street pharisees and give it to moral stewards competent in producing good fruit.”

Blankfein now urges Goldman Sachs executives to share a little of their bonuses with charity. And let’s not forget the international “philanthropist” George Soros who gave a public relations tithe to English charities after trampling the British pound for his personal enrichment. ‘But to what avail is such false goodness’ says the Hebrew prophet Malachi, since the Universal Sovereign has ‘little use for gifts derived from robbery’ (Malachi 1:13, Bible).

What should we conclude? If the Lord does not want Blankfein’s guilt money, then neither should we. Just take the whole darned institution of Wall Street banking and put it in new hands. If we don’t, the morally stunted wizards of Wall Street will continue to befuddle every attempted administrative penalty and regulatory remedy.