Banking and crime revisited, as all the talk is on same-sex marriage
Ronald Reagan’s signature line from the 1980 presidential debates keeps coming to mind, stuck in my head like some annoying ad jingle that just won’t go away. “There you go again.” The line effectively portrayed Jimmy Carter as the same old, same old.
I think about it every time I read the paper or tune in to the news, only to realize that I’ve already heard the story being reported. The names change over time but the basic plot is simply yesterday’s forgotten lesson recycled as today’s breaking headline.
I’m beginning to think of the body politic as a gerbil trapped in an exercise wheel — the harder it runs, the more the poor beast remains stuck in the same place. Perhaps we’re suffering from some sort of collective Alzheimer’s disease that limits public debate to the pointless circularity of the film “Groundhog Day.”
Way back in 2008, Henry Paulson became briefly famous by announcing that the banking industry was about to collapse. At the time, Paulson was the treasury secretary. After he advised then-President George W. Bush of the situation, the latter man commented, “This sucker could go down.”
As the sucker in question was the international banking system, this news was not particularly well received in financial circles and the Great Recession began. The after-shocks of that calamity are still being felt.
In response to the crisis, the Troubled Asset Relief Program (TARP) was born. This effort was both a massive public bail-out of private folly and the only viable option left on the table. To prevent a recurrence of this misadventure, the Dodd-Frank reform package was passed by Congress. Never again …
During the ensuing years, rescued bankers have lobbied heavily to gut the legislation. Sympathetic Republicans have portrayed it as a needless expansion of federal regulatory power, an unwarranted governmental intrusion into the sanctity of the free market. One of the law’s most vocal critics was the Chairman and CEO of JPMorgan Chase, Jamie Dimon.
Last week, Dimon announced that his bank had accidentally lost $2.3 billion gambling on financial derivatives. Because a portion of the bank’s wager consisted of commercial deposits, at least some of the money was federally insured. And if the bank were to fail completely, the tax-supported FDIC would be on the hook for up to $250,000 per account.
Of course, had it won the bet, the bank’s profits would have been taxed at the 15 percent capital gains rate rather than the earned income rate of 35 percent. The modern banker is thus a capitalist when he wins and a socialist when he loses.
It costs to ensure that crime doesn’t pay
Of course, the public sector was affected when the economy went south. As unemployment rose, tax revenues dwindled while the demand for public assistance soared. State and municipal budgets were stretched to their limits, necessitating reductions in social services. Law enforcement was not exempt.
In St. Louis, where crime is always topical, the police chief recently announced plans to eliminate 80 commissioned officers through attrition. An additional 20 slots are on the chopping block when the federal grant that funds them expires. That’s a potential loss of 100 officers in a city that perennially ranks at or near the nation’s top in violent crime.
Meanwhile, the Missouri legislature contemplates relaxing probation and parole guidelines to reduce the cost of housing convicted felons. That proposal has produced an unlikely alliance of social liberals and fiscal conservatives. The former remain convinced that inside every convict there’s a god-fearing taxpayer trying to get out, while the latter won’t raise taxes regardless of the consequences.
The last time the bleeding hearts laid down with the budget hawks was during the '70s when the issue was mental health. The Birkenstock Brigade felt it was inhumane to confine the afflicted, especially when a new generation of psychotropic drugs was available to treat them. The Mr. Potters of the world were down with that idea because they were tired of paying for institutionalization.
As a result, public asylums were closed and their inmates released into the community armed with prescriptions. The only flaw in the plan was that it relied upon the mentally ill to behave responsibly by taking their meds — which is how we inherited most of the homeless problem that plagues every major American city.
Presently, our emergent crime strategy is to put more criminals and fewer cops onto the streets. That tactic may not work out real well for the average citizen. Economist Steven Levitt calculates that an increase of 1 additional incarcerated prisoner corresponds to a reduction of 15 Part I crimes a year.
Say again: 1 extra prisoner = 15 fewer Part I crimes annually. Part I crimes, incidentally, include murder, rape, robbery, assault, burglary, larceny, auto theft and arson.
Take your eye off the ball
With pressing concerns threatening the nation’s very survival, it figures that the big story of the moment is gay marriage — the one issue that would have virtually no impact on most people’s lives.
The Republicans must be delighted that the Dems are finally out of the closet on this one. No state has ever passed a gay marriage ballot initiative, although 33 have tried. Most people will vote their pocketbook next November but outraged social conservatives could provide critical margins of victory in swing states like North Carolina.
Judging from the brisk trade in handguns, crime remains a popular concern and the bankers are once again running amok. But the question of whether consenting adults can become spouses or should remain merely lovers could decide the presidency. Well, there you go again …