Begging the Banks, Beggaring The Country
by digby
Yesterday I took a little trip down memory lane to look at some of Hoover’s policies during the depression. This was one of the highlights —- his effort, years into the depression — to persuade the banks take voluntary action:
Hoover in 1931 urged the major banks in the country to form a consortium known as the National Credit Corporation (NCC). The NCC was an example of Hoover’s belief in volunteerism as a mechanism in aiding the economy. Hoover encouraged NCC member banks to provide loans to smaller banks to prevent them from collapsing. The banks within the NCC were often reluctant to provide loans, usually requiring banks to provide their largest assets as collateral. It quickly became apparent that the NCC would be incapable of fixing the problems it was designed to solve, and it was replaced by the Reconstruction Finance Corporation.
Dday writes today about some very sad deja vu:
Sherrod Brown (D-OH) has sent a letter to four top banks (Bank of America, Citi, JP Morgan Chase and Wells Fargo) asking them – begging, really – to cooperate with the HAMP (Home Affordable Modification Program) and help homeowners avoid foreclosures.
It’s not exactly the same thing, of course. But it’s the same principle. 80 years later, no lessons learned, it’s back to begging the banks to “do the right thing.”
It won’t work any better now than it did then (although I can’t blame Brown, who’s reduced to this because there is no other path available for a single senator.) Banks have shown that don’t even “do the right thing” if it’s in their own self interest. Ask Uncle Alan:
“I made a mistake in presuming that the self-interests of organizations, specifically banks and others, were such as that they were best capable of protecting their own shareholders and their equity in the firms,” Greenspan said.
“In other words, you found that your view of the world, your ideology, was not right, it was not working,” Waxman said.
“Absolutely, precisely,” Greenspan replied. “You know, that’s precisely the reason I was shocked, because I have been going for 40 years or more with very considerable evidence that it was working exceptionally well.”
Credit to Greenspan — at least he’s willing to let go of his orthodoxy in the face of reality crashing down on his head. The rest of the wingnuts are doubling down on Hooverism, as if it was just invented last month at a Heritage Foundation retreat.
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