philosophy, do we, the american people, and really our representatives, believe that bank x, that is going under, do we sit around and wait for its to unwind itself and go through its living will. will people say, that is going to effect the market, and ergo let s save it. we re looking right now at a congress that is willing to cut food subsidies for poor people, particularly for poor children, and we don t think, oh, look, our children are too important an asset to let them go hungry. that notion of this being an id ideology. one of the things hank paulson says he regrets most the bankers get big bonuses after the bailouts. and yet we can have a farm bill that cuts out food stamps but are you saying do americans value ceos more than poor children?
what do they do with those assets and instructing them what to do is very complicated. on the politics, i ve heard on one hand, okay, this was a missed moment, then, maybe it was a lack about understanding. lack of accountability. if you look and see who s been held accountable, kind of no one. when you look at that 600-page report that came out of the bankruptcy examiner that came out of the lehman bankruptcy, right, and he found actionable manipulation. those are his words, not mine. and nothing came of that. i mean, so i think that there s a sense that, if you re a banker and there is no accountable at the end. i just don t think that anybody s really been penalized in ways that we ve seen in the past. and it feels with too, when you say accountable, that carrot and stick problem, for if they are going to be so big, as part of our economy, then we both need the greed of bankers would operate and be forced, as a matter of policy, to serve the public good. and there have to
what we don t want to do is say, we don t need banks, obviously we do, right? how do we shift the profit motivations, the greed motivations, so they serve a collective good? this is the problem. the housing policy and the policies that we instructed banks too engage in contributed to the crisis. that s one of the reasons why a lot of the bankers haven t gone to jail. they were complying with federal it wasn t illegal, right. they were complying with federal regulations that require them to lend to people with below-mo below-median incomes. and the problem is, if some of those people have poor credit, you increase the riskiness of the mortgage portfolio. but see, this is that return to the idea that what crashed wasn t the bankers and their choices, but these sort of irresponsible it was a combination. homeowners. this is why i think it s a mistake to turn this into a morality play and try to figure out, you know, who s morally culpable for the crash. i think it does
whatever way you come up to regulate them is going to be complicated and the bankers will have conflicts of interest and will want the industry to be regulated in a way that benefits them. so they have to be part of that process. and i think we ve gone the direction we have for a set of good reasons. it doesn t really work just to say, we ll break up the banks to the point where they re small enough it doesn t matter if they fail. lehman wasn t that big. so i think dodd/frank, the approach they ve taken, we need to make them safer so they re less likely to become insolvent and need rules that allow the government to better manage them if they do fail. it s still an open question whether that s going to work. but we took that approach because we had to take that approach. i don t think there s another way to approach this and try to prevent another crisis. so, on the one hand, i get this, right? i get what josh is saying, and this is the too big to fail narrative that emerged. that th
no one s doing that. no one s talking about it. they have the idea, the banks, they get bailed out. what can you do? too big to fail? so i think that there s no conversation that then pushes the political discourse, that then pushes the politicians to push it back against those who fund them well and those who frankly have a lot of power. look at all the number of meetings that had happened to try to get some of these iterations and various versions and parts of the bills passed. the bankers are in there at every moment negotiating and tweaking and tweaking until it lost all its power. and part of that is about the asymmetry of information. i may care. i may be at home shaking my fist, but the amount of time i spent over the course of this past week, learning about leverages and derivatives, and to be able to sit at the table this morning. part of the problem, the reason the bankers could be in there doing it is because there is an asymmetry of information. they know how these proces