Liberalism, as an experiment against common sense, undermines
every institution it touches, including financial ones. In the age
of political correctness, the conservatism of the banking industry
was bound to give way to mindless multiculturalism and Great
Society babble. Tried-and-true lending principles were deemed
illiberal and imprudent loans became a form of “progress.”
Whatever the area that falls under it — whether it is banking
or education — liberalism’s regulatory regime consists of forcing
people to adopt ideological goals which defy rationality: banks are
told not to insist on such outmoded tests as good credit; schools
are told not to insist on good test scores for admission. High
standards across the culture have eroded under liberalism. Why not
in banking too?
Indeed, given the choice between economic decline and political
correctness, liberals always choose the former. To preserve the
kangaroo rat, they will cut jobs. To advance faddish global warming
theory, they will undercut whole industries. Instead of bemoaning
economic decline, they normally interpret it as a measure of
enlightenment: that some worthy ideological goal, far more
important than money, is slowing business down.
According to the conventional wisdom of the media, the country
grows more receptive to liberalism in an economic crisis. Maybe so.
But this makes no logical sense, given liberalism’s anti-market
biases. Entrusting the economy to liberals is like entrusting a
cancer ward to Dr. Kevorkian.
Liberalism inveighs against “de-regulation,” but it de-regulates
too — as long as the discarded rules are conservative and
common-sensical. If destructive deregulation lies behind the
banking crisis, it is the deregulation of liberal legislators
telling cautious bankers to forget their musty old rules and give
bad loans to low-income, poor-credit Americans.
Nancy Pelosi and company cast themselves as the guardians of
prudence and critics of libertinism, but liberalism is imprudence
writ large and a friend to the capital sins, including greed.
The Great Depression had its Jazz Age; this economic meltdown
has its own frivolous culture. It revolves around limousine
liberals and left-wing celebrities who toy with theories of
progress while the economy implodes and ordinary Americans suffer.
Many of the corner-cutting Jay Gatsbys on Wall Street didn’t oppose
the Democrats’ regulations but wrote them, and far from fearing an
Obama administration they plan to vote for it.
This crisis exposes not the opposition between big business and
big government but its collusion. Derelict bankers just resemble
the liberal politicians who oversee them. Earmarking pols treat
money cavalierly, then encourage bankers to behave the same,
mandating that banks give out loans to people who don’t deserve
them in the same way Congress doles out pork projects.
Dilettantish environmentalism gave us an energy crisis —
decades of blocked drilling and energy production lest the Sierra
Club and Greenpeace get upset. Now progressive banking gives us
this mortgage one. And we’re told that the solution to these crises
produced by liberal regulations is even more of them — more Great
Society-style banking, more “investments” in government debt, more
Wall Street-Congress collusion.
The public’s suspicion of anything proposed by Congress is well
founded. Congress devotes almost all of its time and energy to the
appearance, rather than the reality, of solutions. We are
witnessing the disintegration of a profoundly unserious political
culture in which nobody really knows what they are doing.
Only when a crisis is on top of Congress does any real
deliberation take place, and then — as in the case of renewed oil
drilling off coast lines — the solution is essentially a
conservative one, marking a reluctant return to common sense.
