Moral Collapse

Financial Crisis Cause No. 2: The moral collapse of the American working class.

AIG head Robert Benmosche has recently pointed out that the reason his firm has enjoyed such great success is precisely because it has avoided selling insurance to the large number of Americans who believe, as Benmosche put it, "that the government is responsible for what happens to me." (As we know, the government is responsible only for what happens to AIG).

The CEO of JPMorgan, Jamie Dimon, has often called our attention to the outrageous amount of banker bashing by Americans outside the financial sector, who seek to blame their troubles on others.

Wall Street leaders now understand that they made a mistake, one born of their innocent and trusting nature. They trusted ordinary Americans to behave more responsibly than they themselves ever would, and these ordinary Americans betrayed their trust.

Amazingly, these ordinary Americans don't even appear to feel guilty for their actions. Like wild animals that have lost their fear of humans, they continue to wander down from the hills to rummage through our garbage cans for sustenance.

Best Subprime

Frankly, the commission's report does nothing to improve public morals. In discussing the role of the 1977 Community Reinvestment Act, for instance, the report notes that the loans made by big banks to meet the act's requirements -- that is, loans to poor people in crap neighborhoods -- outperformed, dramatically, the general run of subprime loans.

Such nitpicking merely obscures the critical point. For at least two centuries the U.S. government has encouraged people who didn't work on Wall Street to think of themselves as "equal." Government policies have emboldened ordinary Americans to borrow money they never intended to repay, just like rich people do, and cowed the financial elite into lending it to them. You can't forget to bear-proof the garbage cans, and expect the bears won't notice.

Along these same lines I cannot help but point out...