Eye opening Paul Krugman Op-ed piece in the New York Times, speculating about the reasons that federal officials have been giving "kid-gloves treatment" to banks that have engaged in abusive mortgage practices. Here's the lede:
Ever since the current economic crisis began, it has seemed that five words sum up the central principle of United States financial policy: go easy on the bankers.For Krugman's savvy analysis, read on:
This principle was on display during the final months of the Bush administration, when a huge lifeline for the banks was made available with few strings attached. It was equally on display in the early months of the Obama administration, when President Obama reneged on his campaign pledge to “change our bankruptcy laws to make it easier for families to stay in their homes.” And the principle is still operating right now, as federal officials press state attorneys general to accept a very modest settlement from banks that engaged in abusive mortgage practices.
Why the kid-gloves treatment?
We don't often agree with the Keynesian Krugman; but we do believe he's spot-on in this practical, nuts/bolts instance.
So what about it O Gentle Ones? Isn't Krugman correct? Shouldn't we hold bankers accountable for their actions, just like everybody else? If not, why not?
