MA & PhD in Critical Thinking Blog

# 25 in Questions Solicited by New York Times for Financial Investigation:

The general justification for a) the banking system in general and b) the government bailout is that you provide the financing necessary for the running of the “real economy.”

Given this, can you please explain:

a) Why the lending freeze and ridiculously difficult new metrics for lending instituted in the wake of the Lehman collapse in September 2008 are still in place more than a year later, when the most obvious economic problem is slow growth caused, in no small measure, by lending standards that are as overly strict as the previous ones were too lax?

b) How you can justify the massive bonuses you are planning to hand out – in whatever combination of cash / deferred stock options / etc – in light of these excessively strict standards for loaning money to people OUTSIDE the banking sector ???

and

c) Whether the argument “we need it to retain the ‘best’ people” can’t easily be overcome by government regulation that will set ranges for the ENTIRE sector, so as not to give any one of your institutions some sort of “competitive advantage” in the recruitment & retention of any particular individuals ???