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.