Who's really to blame?

[travesty]

So I spent the weekend with my in-laws, always interesting. I had a conversation with my father in-law and want to see what you all thought. We were discussing the bank bailouts and the caps on bonuses for the heads of these big banks. My father-inlaw lost a LOT of money in this debacle, most his retirement was tied up in financial companies and banks. Of course, he's out for blood now and wants to see salaries capped and bonuses slashed. However, within the same conversation he made it clear that it amazed him how no one saw this coming. That he was always leery of subprime lending and no doc loans and the such as they just didn't make sense. He is very traditional and was, luckily, the one who insisted that my wife and I do a traditional 20 year fixed mortgage instead of a more exotic arrangement. So I asked him if he knew the practice was sketchy, why he didn't move his investments from the companies that were engaged in such practices? Well, his answer was that the stocks were doing really well and the more conservative banks weren't. In fact it was looking like he may even be able to retire a little early because of it. SO I asked him if he thought that during that time the CEO of the risk taking bank was doing a good job. Of course the answer was yes, he was making the stockholders money. You see where this is going right? I'm about to become the family asshole very quickly.

When I pointed out the hypocrisy of knowing something is wrong but living with it just for the $$, then calling for people's heads when the risk catches up with you, that's just being greedy and then petty. Result....you guessed it....big fight.

My question is this. How much blame is appropriate for the heads of these smaller banks who were just trying to stay competitive with the big boys who started this whole subprime fiasco. Didn't they owe it to their shareholders to try and remain competitive? Isn't it their JOB to increase the value of the stock? Wouldn't they have likely lost their job had they failed to provide competitive returns? I mean this whole mess wasn't illegal, was it? So at the end of the day was it really the CEO who was being greedy or was it the stockholders being greedy, or both?

Of course I topped it all of by asking him if he thought that after all that has transpired if it was in his best interest to have the government limit the amount of $$ the company can offer a CEO, thereby limiting the talent pool, and still expect the company to perform adequately going forward. He didn't really have an answer for this as he was already steaming mad.

To me it seemed that a sense of revenge was getting in the way of his best interests moving forward. Am I missing something? I know we are all pissed off right now, but how much of the blame do we have to accept as being a result of our own greed and ignorance?

[Dorothy Wood]

I think everyone who played the game is to blame.

The problem is, the people who are good at making money are the ones who are hungry for it. I might be good at making money, but I don't really care that much about making it to put effort toward it. Moneymakers are intrinsically greedy, because that greed is what drives their success.

Anytime people are making money for "free", trouble arises. If you aren't getting concrete rewards for concrete actions, it starts not to mean anything, and the greed increases. When we're talking about millions and billions and the national economy, pushing the limit to make that extra dime only means anything when it's too damn late and we're all fucked.

So yeah, your father-in-law needs to calm down and lie in the bed he helped make. I'm guessing a lot of the anger he expressed comes from the fact that deep down, he knew he was taking a risk and is partly to blame. It's just easier to blame someone else or an outside entity, The Bank. And it's even better when he has an actual person (you) to yell at.

:)