The rocket scientists of banking, who just about exhausted their loot from 2008, seem to be on the run. Some sold their stock and options when the accountants informed them that the situation is dire. They have a great defense though. There is precedence. A graduate of the greatest business school in the East Coast and a partner of a Management Consulting firm that holds the universe together with sheer intellectual power, remarked on his trial, “I do not know accounting, I rely on my subordinates for that.” The big man is still enjoying accommodations provided by the state. The ones who took the money, now “backstopped,” by taxpayers seem to be on the run. A great investor remarked, “this is not a bailout, those responsible will be held accountable?,” — Really, have the shorts paid off already?
And now, if the regulators learned anything from 2008, they would know there is something called moral hazard. It is taught in the great business schools as a tool to train criminals and sometimes the regulators never opened an economics or finance text book. It simply means that if you reward bad behavior you are guaranteed to get more of it. Humans are worse than animals, their brain is only seeking food (money) and sex, and nothing else. If you hang a big piece of meat in front of a banker, she will run for it. And in spite of the great ethics courses that became popular, when the professors run up and down the aisles with gusto teaching young kids how to be ethical when they graduate, things have not improved.
Meanwhile, the smart executives are picking up their own company stock. There is free lunch, Prof. Friedman, and here is a good example. If there is no failure of the companies they “run,” they will make a pot of gold. And if their companies fail, the Fed will backstop and they will come out ok. They just need to get advice from the executives of failed banks how they did it.
Banking, the definition of corruption, has attracted mostly criminals and they shall make the taxpayers pay, again.