Commemorating the Financial Panic: It Ain't Over Yet
By Danny Schechter
New York, New York: Media outlets love anniversaries. They become the makers and news-pegs for one day stories that become pretexts for episodic coverage of key issues that substitute for ongoing critical reporting,
It's a form of nostalgic "how are we doing coverage " that aims to depoliticize the past or give us a grade, but not look too closely at the causes of the crisis.
So, no surprise, the President will mark the occasion this week, with, what else--a speech, no less than a speech, really "remarks," aimed at providing a positive spin for a series of economic disasters that we have yet to climb out of.
Reuters reports: "A White House official said Obama will deliver remarks in the White House Rose Garden on Monday to mark the fifth anniversary of the financial crisis, which was accelerated on September 15, 2008 when the Lehman Brothers firm filed for bankruptcy protection.
The Democratic president will focus on the positive , discussing progress made and highlighting his prescriptions for boosting job creation amid budget battles expected with Republicans in Congress in the weeks ahead."
Is this really an anniversary? Bear in mind that that venerable bank, Bear Sterns went down a year earlier, in 2007, and that consumers were being targeted by financial predators pedaling subprime loans and other financial frauds for many years prior.
To anoint an anniversary, you need a date, even if it is not precise, and, so, the mensas in our media have decided that the collapse of the Lehman Brothers investment bank in 2008---an event that is still mostly murky--with many saying that the government acted irresponsibly in letting this "too big to fail" financial institution fail, has been identified as the tipping point.
The London-based Guardian, unlike most of the American press revisited just what brought Lehman down. (It was a bank incidentally that was one third owned by its employees.) They interviewed Michele Nicoletta, then chief of "Latin American flow credit trading" at Lehman, and the person in charge of the firm's trading of bonds and credit derivatives in emerging markets.
Heidi Moore reports, "The public recriminations against the firm were difficult to bear, she says, knowing that Lehman was paying the price for the risk-taking culture most veterans considered normal at all Wall Street firms. "I think Lehman was a bit of a scapegoat. It got singled out. There was a lot of speculation as to why Lehman was the chosen one as opposed to anyone else. I don't think Lehman was the house of greed; I think Lehman was made an example of, and it was unfortunate."
Lehman's collapse. according to studies of that volatile period, was blamed on then Treasury Secretary Hank Paulson, who, when heading Goldman Sachs, was a prime competitor. His animus towards Lehman was reportedly bitter and very personal.
Lehman was headed by Dick Fuld. another brass knuckles Wall Street warrior, who later referred to himself as "the most hated man in America." Like his competitors he rode the fraud intensive subprime mortgage market to glory until it imploded over one of Americas most prestigious banks and turned him into the financial equivalent of Dante's inferno.
Fuld became scapegoat,#1 in part because of his arrogance and lousy PR skills, but he was hardly alone in defrauding customers and short-changing our economy.
Another Guardian article puts the date of this "anniversary" in doubt too, after talking with Lord Turner who took over as chairman of Britain's SEC, the Financial Services Authority, a week after the American authorities failed to find a buyer for Lehman. Noting, (He) believes the crisis pre-dated the collapse of Lehman, and even the run on Northern Rock in September 2007.
"For me," he said, "the lesson learnt is that the roots of this crisis go back very deep. Over a number of decades we allowed too much leverage to grow in the real economy, and we allowed the banking system to become over-leveraged. I think we were running a system with such small buffers of capital and liquidity that by 2006-07 a crisis was bound to occur.