Heads Should Be Rolling

Thomas Friedman, following up on this New York Times article, makes the case that the leaders of the financial industry, now reaping the benefits of the gargantuan, taxpayer-funded bailout, are incompetent or worse:

Why? Because in searing detail it exposed - using Citigroup as Exhibit A - how some of our country’s best-paid bankers were overrated dopes who had no idea what they were selling, or greedy cynics who did know and turned a blind eye. But it wasn’t only the bankers. This financial meltdown involved a broad national breakdown in personal responsibility, government regulation and financial ethics.

With due respect to Friedman's acknowledgement that responsibility spreads well beyond those financial institutions, and duly acknowledging his focus on the leaders of finance and that he's not defending Paulson's decision to treat them with kid gloves, how can you argue but that those at the top of the financial industry who were either too stupid or too greedy to put on the brakes should be keeping their jobs, even as they get tens to hundreds of billions of dollars of taxpayer money and guarantees for their junk securities?

Also check out Michael Lewis’s superb essay, “The End of Wall Street’s Boom,” on Portfolio.com. Lewis, who first chronicled Wall Street’s excesses in “Liar’s Poker,” profiles some of the decent people on Wall Street who tried to expose the credit binge — including Meredith Whitney, a little known banking analyst who declared, over a year ago, that “Citigroup had so mismanaged its affairs that it would need to slash its dividend or go bust,” wrote Lewis.

“This woman wasn’t saying that Wall Street bankers were corrupt,” he added. “She was saying they were stupid. Her message was clear. If you want to know what these Wall Street firms are really worth, take a hard look at the crappy assets they bought with huge sums of borrowed money, and imagine what they’d fetch in a fire sale... For better than a year now, Whitney has responded to the claims by bankers and brokers that they had put their problems behind them with this write-down or that capital raise with a claim of her own: You’re wrong. You’re still not facing up to how badly you have mismanaged your business.”

Corrupt? Stupid? Or is it that they are so used to being lionized by a nation captivated by wealth, despite their limited knowledge and skills, and so immersed in a culture where almost anything goes in the name of profits, that they weren't aware that they should even try to look past their greed?

A few months ago, with this crisis looming, Friedman wrote,

Come August, though, I predict both men will be looking for a financial wizard as their running mates to help them steer America out of what could become a serious economic tailspin.

I wish he had "named names", as I am curious as to whether the reputations of the "financial wizards" he had in mind would have survived the past five months.